Owning Up

Social media technologies can be a powerful tool, but it’s important to know who within your organization should be taking the lead for your social media marketing strategy, which includes responsibility for everything from budgeting to staffing.

It’s commonplace for executives and managers to ask about social media leadership and inquiries stem from the growing desire to get involved with communities of customers, partners, and employees.

However, this question of who within an organization “owns” a specific community isn’t easily answered because it’s really three complex questions that need to be answered first: who interacts with the community; who pays for it; and who champions it?

Who Interacts with the Community?

Organizations have many questions when they get started with social media. They want to know who will write the blog, who will run the forum, who will manage the Wiki. These are all good questions about who you entrust with the responsibility of being your spokesperson to a specific community.

Some companies, such as General Motors, have high visibility bloggers (like GM’s Vice Chairman Bob Lutz). Other companies have a general manager overseeing its community efforts (like Intuit’s Scott Wilder). And other businesses field an team (like Southwest Airline’s Nuts About Southwest blog, which includes contributions from a diverse group of employees including Gordon Guillory, a Structures Mechanic in the Heavy Maintenance Department).

These different approaches show that any employee can interact with communities that they never deal with face-to-face with in their regular work. Community contacts shouldn’t be determined by title or department, but rather, by the mindset and judgment of the person in the job. It must be someone deeply passionate about developing that specific relationship – even if it means challenging long-held corporate culture and standards.

Natural places to look for these individuals are in marketing, public relations, and corporate communications. But don’t overlook customer support, market research, and product management as well.

Who Pays for Community?

The easy answer is that it depends on the goal of the community and who benefits most from the community. For example, a company may form a community for the express purpose of gathering insights into its customers. In this case, market research could work with vendors (such as Networked Insights, Passenger, or Communispace) to create a private community that can be polled and asked questions. These interactions can be used to supplement other sources like surveys and focus groups. In this example, it’s clear that market research should fund the community. However, companies can also allocate back the expense to other departments that also tap into that community for insights.

Communities can also be formed to provide better support. For example, through the use of discussion boards where customers, as well as company representatives, can answer support questions, the customer service department can eventually see decreased costs. In that case, customer service should pay for the community, as well as provide focus and direction.

One circumstance demands additional detail — when the IT organization should pay for (and control) community. IT usually gets involved when there’s a need to have a company-wide adoption of social and collaboration technologies. Historically, this has meant enterprise deployment of collaboration platforms like Sharepoint. In contrast, most social technologies are point solutions, designed for easy adoption by business users and requiring minimal IT involvement. IT typically becomes involved in social technologies when integration is needed into existing corporate systems and databases, where the role IT plays is one of ensuring security and systems maintenance. At some point, there will be enough point solutions where IT may also need to get involved to ensure corporate consistency in identity, data structures, and security, as well as in vendor and platform selection.

In the end, who pays for and thus controls the community should be fairly easy to determine because the formation of the community should be based on concrete goals that benefit the organization. If the goals are unclear, then the question of who pays for the community is the least of your worries.

Who Champions Community?

Deploying social media and creating communities is hard work that often challenges long-held company beliefs and cultures. But social media and community managers typically are younger, and earlier in their career, and thus they don’t always have the skills or the clout to be a change agent within an organization.

What’s needed is the third area of community ownership – executive sponsorship. Take for example Ben and Jerry’s. CEO Walt Freese is deeply involved in social media at the ice cream maker and not because he thinks it’s cool, but rather because he believes social technologies are crucial to deepening relationships with core customers – the lynchpin to increasing customer lifetime value.

Freese’s office title is Chief Euphoria Officer and he is the bearer of the social media torch inside the company, encouraging the integration of social media into all aspects of customer relationships, from marketing to customer service.

And at H&R Block, Paula Drumm, vice president of Interactive Media, has been the executive champion. She’s been educating executives while steering her team to engage with customers in multiple social media channels. Like many companies, H&R Block executives are conservative and come from a generation that’s generally skeptical about social technologies. Drumm’s change management skills have helped the company become a model of how to develop customer relationships with social media.

A key skill of this champion is the ability to understand far and how fast to push. In Naked Conversations by Robert Scoble and Shel Israel, the authors write about the importance of understanding the “corporate membrane” – how to stretch it to accommodate social media but not to the point of breaking.

The hard part of about this particular question is that it’s hard to appoint someone into position — usually, this person volunteers because they see the need and have the passion and energy to lead change within the organization.

Everyone owns Community

It’s a mistake to treat community as a separate, distinct asset because you’re talking about relationships that are core to the form and function of a business. In the end, everything that a company does flows through some sort of process that touches a relationship be it with a customer, partner, or employee. Thus, there’s opportunity for everyone in the company to own a piece of community, if only they are given the chance to do so.

I believe that a company that can spread the wealth of community involvement and ownership widely throughout a company will always be better positioned to win than one that doesn’t. After all, all companies want to be closer to their customers.

So, think hard not only about who will own community today in your organization, but also who is best positioned to open and share that ownership throughout the entire organization. The future health of your company may well depend on it.

Participation Is Not Passive

Elvis has left the building and he took the audience with him.

The only people left are fellow participants. Social media has made everyone an author, creator, director, developer, editor, critic and media outlet. There are millions of voices, but they are all saying the same thing – listen to me.

Participants do not consume passively. They do not sit silently ready to have their eyeballs converted into cash. Participants participate. They create their own original information, entertainment and art. They remix their own version of mainstream pop culture – copyrighted or not. They post their thoughts, publish their fears and fact check faster than any newsroom. They share with their friends to discover the quirky and interesting, making it an instant blockbuster- at least for 15 minutes.

Participants have ideas to be declared. Each of them is a market of one. Collectively they are a trend, a publishing powerhouse and a voice to be heard; a voice that has something to say. Participants have changed the way media is published and interactions are monetized. But more broadly and importantly, they have changed the flow of global information from top down to bottom up. They are changing the tone and tempo of the conversation.

Who’s Listening

While there are so many buzzwords surrounding this topic – social media, Web 2.0, conversation – many are overused, misused and misinterpreted.

The word conversation comes up over and over, but it’s a concept that is as old language itself – maybe even older. It is not a new construct invented by the social media advocates.

And while the medium for conversation has changed and evolved over time, the fundamental human need for conversation remains the same. We want to connect to each other. We want to express ourselves. We want to hear authentic voices engaged in a dialogue with us. Everyone wants to be heard and feel valued.

But who is doing the talking is also important. The conversation between customers and businesses must include people that are empowered by businesses to make decisions. This is not just about your support staff or marketing department interacting with customers. CEO’s, vice presidents, product managers, and other executives must be part of the conversations.

The Art of Conversation

It’s also what is said and how it is said that is key. With social media, you must treat these conversations as you would any face-to-face interaction – act like you would at a dinner party. After all, this is a social setting like any other. You say what you would say in any face-to-face conversation at a dinner party. Respond respectfully to criticism. Escalate the feedback. Act on it. Thank people for compliments. Elevate them. Ask them for more information. Reward them for their efforts. Empower them to spread the word.

That all sounds great, but ultimately for businesses, it’s about the return on investment or quantifying revenue generated by these conversations. At this point, it’s hard to put a specific value on a human connection or word or mouth. But imagine the value if all this “idle chatter” was publicly documented, archived and spread around to thousand of friends and connections. With social media and the web, it is.

The return on investment is nothing short of identifying your weaknesses in a rolling and real-time focus group. It is finding your friends in the marketplace and turning them into evangelists for your product or service. It is the new marketing – one-on-one influence of your market.

More importantly though, it’s beyond influencing your market; It’s about your market influencing you – shaping your product or service. It’s about making your stuff worth having a conversation about.

Getting Started

First, do some homework. Read some books – The Cluetrain Manifesto and Naked Conversations – are a good start. Then move on to Blink and Now is Gone. Then get off the beaten track. Start using the tools and services your market is using – Facebook, MySpace, Twitter, Seesmic and FriendFeed, to name just a few.

But having a Facebook profile or a presence is not enough. That’s just like walking into a dinner party. The next step is finding someone interesting to talk to. Participate. Find Facebook groups that matter. Search Twitter for people talking about your company, product, service, industry, competitors and pain points. Respond to them. Listen to them. And respond again. You just had a conversation. A dialogue between two participants where one communicates something, the other digests the information and responds.

It’s not magic, but it is magical. It is basic. It is human. And it works.

Show me the Money

Currently, looking for the money in social media marketing is like asking directions in a foreign land when you don’t speak the language and don’t know how the locals connect and communicate.

Social media is commonly defined as comprising “primarily Internet-based tools for sharing and discussing information among human beings.”

As an online marketer you want to hear about ad copy and conversions. Everyone – your audience, customers, and your employees – wants you to listen, connect, and collaborate. You want to control the conversation so people click. They want you to understand there is so much more – including profits.

Here are three models that are working and speak to business in terms it can understand – cost savings, marketing, advertising, customer service, and lead generation – as well as terms it may not yet understand like passion, heart, transparency, sharing, not controlling, and being there for your customers. These are business models that go beyond mere advertising.

Business Model 1 – Social Product Development

Why hire employees to develop new products when you can have the audience do it with you, and both of you get paid? Even better, what if you could involve all of your audience to share, participate, and spread the word, and get them paid as well?

This is the new world of virtual currency or creating value out of traditional points systems. T-shirt maker Threadless.com allows people to judge, promote, and even get their picture taken wearing a t-shirt, and rewards them with points each step of the way. Points can be redeemed for cash.

While MetaCafe and others have tried to incentivize content creators by paying them a fee based on ads, Threadless.com takes it to a new level where the creators and fans of their T-shirts can help spread the word and generate sales.

How They Do It

Designs are submitted to the community and printed by Threadless, who shares some of the revenue with the creator. Each action is tied to some form of currency; some of it is monetary, yet in social networks much of the social currency is how people view your reviews, your creativity, and support it.

By incentivizing certain actions and maintaining an active community, they unleash the genius of their audience and profi t.

  • Incentivize the product creators: they invite people to submit T-shirt designs. If it is selected, the person can win up to $2500, or maybe even $10,000 if it is selected one of the Best.
  • Pay the slogan creators: submit a slogan and win up to $200, so you don’t have to be able to draw to win.
  • Incentivize consumers to spread the word: Members of this social community can recommend t-shirts via email, or traditional affiliate links, and earn two credits (about $3) per sale. If they get their picture taken with their favorite T-shirt and submit it, they get one credit ($1.50). If the picture is used in the main site for promotion, they get 10 credits ($15.00). Considering t-shirts run $9-$30, that is a significant bounty for a small action.
  • Reward people for taking action: The key to Threadless is the fun community. Just paying people to promote and create is one thing; rewarding them for good behavior and excellence is the new way of product development.

Business Model 2 – Direct Response Media: Ads and Performance Marketing

This is the most common model in use, with businesses basically trying to fit the traditional marketing world onto social media with mixed results. When matched to the right audience, this can be very effective. Still, targeting will almost always decrease the overall size of the audience you are reaching, so numbers are not off the charts.

Direct media is the evolution of traditional direct response media (direct mail, DRTV, etc.) and Internet direct response like pay per click and affiliate programs into the social media space. The goal is to get a sale, and these folks have been posting ads, manipulating search engines, and building links.

How They Do It

  • Use personality to create buzz: Create buzz about product by using audio and video-driven business personalities, driving people from social media portals like Facebook and MySpace to their own sites, and even social networks, to create ongoing business.

Gary Vaynerchuk, WineLibrary.TV: Gary combines a video show about tasting wine with ongoing presence in many social networks. He drives people from these networks to his own Wine social network, Corkd.com (he bought it after being successful) and drives retail sales through WineLibrary.com, among other sites.

Gary’s personality plays against traditional wine snobbery and drives sales. Personality is essential, because in social media, how they remember you is the most important thing”and if they remember you. For retailers,this means driving repeat visits, which the video, social networking and marketing continually generate.

  • Develop new direct response ads: Allow people to interact, watch, and make selections within the advertising itself. Instead of an ad inciting people to click and leave the space they are at, these ads invite people to stay where they are, browse, and buy.

MyWeddingFavors.com has an affiliate program that uses video and a special video widget from Qoof.com. Affiliates place these ads in social media spaces, where videos can be played right on the page.

People can choose, watch, and explore while they are in the middle of their own social media experience. Basically the performance based marketing invites them to engage and interact with the ad, and pulls them away from what they are doing BEFORE sending them to the eventual site to buy the product.

Other tactics include:

Buying low cost advertising ($0.50 – $20 CPM) space on a variety of social media through ad networks. Ad buys are mostly based on straight ROI. Clickthroughs are very low. Branding ads are rarely successful.

Posting consistently to blogs, social bookmarking sites, video sites, and tag these posts with keywords in the title, tags, and description to drive search traffic.

Do performance marketing deals and pay others to promote and pay a bounty for a lead or sale. If the ad does not perform, no one gets paid. Lead generation is dominant here, especially to targeted audiences where it works best; because people are often more open to inquiring than to buying.

Business Model 3 – Customer Relationship Management and Employ Retention Management as Social Support Media

Many smart companies are using social media to better engage with their customers, and some to better engage with their employees. But social media canal so be used to manage customer relationships as well.The social media business model is very simple. Your content is your marketing tool. Sois your contact with people, either directly or watching over the discussions, questions, and interactions around your product, your brand or inside your company.

How They Do It

Zappos empowers its employees through an innovative training program which allows them to go out, via Twitter, and be available to answer questions from people and customers. A whole book could be written about Zappos customer service, and in fact it has, by the employees of Zappos (you can find it on their website). Giving employees technology will not solve your problems; inviting them to be passionate about your business does!

The key issue is trust; good employees find good customers if you teach them. Zappos sees employees as assets and ambassadors, not as a cost of doing business, and it shows. They are not afraid of how powerful their employees can become, and in fact, encourage it.

Many smart companies are improving communication and efficiency within their own company with social media, as a way to improve communication internally. Social media technologies like microblogging enable employees to follow each other for specific projects, and gives management an excellent tool to keep an eye on the growth of the business.

Best Buy claims it has drastically improved employee retention with social media. Technical firms like Cisco and Intel swear by their internal social media initiatives that foster ideas and feedback, while saving money and time. Financial firms like Wells Fargo are seeing better production by employing some social media within the company.

As you can see, there is money in terms of sales, yet also in terms of savings in social media. It is not just an advertising game, and it is one that can change business.

Be Unique

If you want to find the money you have to create your own business model. One that deals with your goals while building a relationship with your audience (and employees) that can reduce expenses and build sales year after year if you manage it right…or better yet, moderate it instead of manage it.

Social media demands a blend of heart and business savvy. You cannot have one without the other; if there’s no business, we should all ignore social media right now (like most of you, right?). If there’s no heart, if no one shows up as customers and employees get bored being employees,nothing really happens. Put the two together and you may find the magic, and profits, you are looking for… because it is the new game and it is happening right now.

Incentivize Your Audience

Budgets are tightening, and advertisers need to boost ROI- fast. The social Web is gaining value not only as a medium that delivers measurable results, but also as a resource for gaining insight a company can use to make all of its advertising (TV, print, online) more effective, to increase ROI across the board.

Social media is known for its wealth of useful information. Using relevant analytics can pinpoint audiences and learn more about them. Need to reach adults who are interested in European travel? How about people in Los Angeles who like spy novels? Done. You can even aggregate more information along the way and optimize your ads as you go, to fine-tune your reach and make your campaigns more effective.

But as important as such targeting is – and it is significant – there’s another valuable aspect to social media: the level of engagement of the consumers with the social “medium” itself (compared with any other medium – TV, radio, print or even traditional online).

People choose to spend time on social sites. They’re not passive observers – they’re active participants. They’re playing games, sending messages, reading blog posts, poking their Facebook friends, commenting on someone else’s photo, and the list goes on. They’re typing, thinking, laughing, and conquering their enemies (only in the games, we hope). They’re engaged.

Use social media to provide access to enough data about demographics, traffic, interests and social actions to pinpoint a target audience and understand them better, and the attention that users give to this medium while they’re engaged.

What you get is the potential to gain unprecedented levels of information about your audiences and your messages by offering people incentives to give some of that attention to you.

The Payoff: Increased ROI

The idea of incentives isn’t new. Most of us have handed over our contact information for the chance to win a trip to Hawaii (or name your destination), or responded to a handful of survey questions to get a free soda with our next meal. The virtual world is no different. In this virtual economy, people still have wants – someone playing a game wants extra points, someone with a virtual pet wants extra gold to buy toys for it, someone in love wants to send a gift of a dozen virtual roses.

The new opportunity for advertisers is to apply the principle of incentives that we’re all familiar with offline to the virtual economy. Offer game points, gold for virtual pets, or a free gift, in exchange for taking a certain action.

It’s in this action where the real gold lies, thanks to the two characteristics of social media mentioned above. No longer are the actions limited to collecting a consumer’s mailing address or surveying for opinions that aren’t tied to any demographics.

The action is to view your ad (banner or video) and answer a few questions about it. The incentive is whatever the publisher is offering as a reward (the points, the gold, the gift, anything).

The payoff to the advertiser is intelligence that will help you increase ROI within all types of advertising.

Your survey can be designed to measure consumer perception:

Awareness – Who has heard of my brand?
Attitudes – How do people feel about my brand?
Favorability – Do people like my brand?
Intent – How likely are people to purchase my products or services?
Preference – Do people prefer my brand or products over others?

The right analytics partner can couple those results with user demographics like age, location and gender, along with interests and social actions. For example, anonymous User A is a 45-year-old woman who lives in St. Paul, reads murder mysteries, plays Scramble on Facebook and says she is “very likely” to see the next James Bond movie.

That is a significant amount of actionable intelligence for any company. In our fictional example, using aggregate (and always anonymous) audience information, the movie studio might discover that while it’s been concentrating ad dollars on reaching the male audience, perhaps there’s value in targeting females that match certain demographics.

Beyond its significant value as an advertising channel in and of itself, the social web is becoming a giant testing ground for companies to discover who their audiences are and how to more effectively reach them – from any medium.

The social space is evolving into a place that offers advertisers an efficient way to understand audience behavior and perception – and to reach people with precision targeting like we’ve never seen before. You couldn’t ask for a better incentive to get social.

AOL’s Advertising Aspirations

What a long, strange trip it’s been for AOL.

The more than 20 year old company that was once at the forefront of Internet community building and defined the online experience for many early Internet adopters, is now experiencing a bit of an identity crisis.

AOL has moved far beyond its famous “You’ve got mail”catch phrase/punch line/movie title. So, then how does AOL define itself ? Is AOL an Internet provider, a media and entertainment company, an ad network, an email provider or a Web portal?

While it’s all of those things in one fashion or another,the company is working toward positioning itself as just one thing – a next generation ad network.

“AOL has reinvented itself so many times. It is hard tokeep track,” says Adam Schlachter, senior partner at media and communications consultancy Mediaedge:cia.

AOL’s ad strategy comes at a time when Jeffrey Bewkes,CEO of Time-Warner, acknowledges there is no future in the dial up Internet. There is increasing pressure as media companies and Web portals aplenty are starting and the future is buying or promoting networks as the next step toward”one-stop” shopping for ad buyers.

Acquisition Spree

In an attempt to reinvent itself, AOL has spent about $1 billion acquiring ad-centric companies over the last several years. (See sidebar). AOL’s first big step into the ad market was its 2004 purchase of Advertising.com for $435 million. Advertising.com made a name for itself selling ad space on websites at a time when few were doing it and is the largest third-party display advertising network.

In 2007, AOL bought contextual advertising company Quigo. It alsosnapped up Tacoda, a behavioral targeting company. It bought Third ScreenMedia, a mobile advertising network and maker of mobile software. It also acquired Germany’s Adtech AG, an international online ad-serving firm and added Lightningcast to its roster of companies. Lightningcast delivers advertising for on-demand, live and downloaded video content on the Internet.

The buying spree continued this year. In February AOL acquired Buy.at, an independent affiliate network based in the United Kingdom, with more than 9,000 international affiliates and merchants such as Butlins, Carphone Warehouse, Capital One, Egg, John Lewis, M&S, Powergen, TMobile and Virgin Media.

In March AOL made a step into the Web 2.0 world by acquiring Bebo.com, the fourth largest social networking site, for $850 million. With more than 40 million members, Bebo’s user base is a far cry from the space’s leader MySpace with 109 million.

The Platform Play

AOL’s Platform A division brings together all of AOL’s ad-related silos under a single umbrella. Formed in September 2007, the division has already experienced a series of executive shakeups. Since November, several Platform A executives have exited including Kathleen Kayse, vice president of marketing; Lance Miyamoto, head of human resources; and Dave Morgan, chief ad strategist.

Curtis Viebranz, CEO of Tacoda, who was brought in as president of Platform A, was removed in March. Lynda Clarizio, a nine year AOL veteran that was previous president of Advertising.com, took over the reigns of Platform A.

Clarizio, for her part, has reportedly jumped in with both feet. She is known to have reveled in the start up culture of Advertising.com. PlatformA insiders say she is looking to infuse the many AOL ad groups with that same startup work ethic. And up until recently, the acquired companies had so many department heads with similar roles that many insiders claim various parts of Platform A were essentially competing with themselves for the same clients.

Clarizio has publicly said she will structure teams so that there is only one sales team, technology team, product and operations team, marketing team and publisher services team. She has also combined the overlapping search marketing efforts by Advertising.com and contextual targeting shop Quigo.

In recent interviews with the media Clarizio focused on the short term goals of the group, rather than the executive turnover and claims of integration difficulties.

“As our technology has continued to advance, we’ve gotten better and better,” Clarizio told the Associated Press.”We can handle a lot of demand from advertisers.”She also told the Washington Post that “this is probably the most dynamic industry in the world right now, the online advertising space. To compete effectively in this space, you have to be constantly pushing, innovating new products.”

Some analysts are giving AOL the benefit of the doubt as it works though integrating all its acquisitions.David Hallerman, an analyst at New York-based eMarketer, says, “It takes a while. This is not just buying technologies. It’s buying human constructs, and it takes a while to work out.”

While Platform A is still in its early stages, its reach is already significant when accounting for all the once-disparate units. According to comScore MediaMetrix, Platform A counted 167 million unique visitors in February 2008 and claims 90 percent of the U.S. online audience. However, AOL as a whole, however, ranks fourth as a Web portal, behind Google, MSN and Yahoo.

AOL’s ad revenue is still growing but not at the same clip as previous years. Its ad revenue for 2007grew 12 percent, off the 37 percent growth AOL experienced in 2006 and the 38 percent growth in2005, according to eMarketer.

“AOL appears to be feeling pressure from aggressive sales targets set against the backdrop of a slowing economy,” says Greg Sterling, analyst at Sterling Market Intelligence.

Advertising.com recently lost its biggest advertiser, University of Phoenix, whose ads accounted for $215 million in 2007 and $157 million in 2006- that’s about 17 percent of AOL’s ad revenue growth last year.

There has also been repeated speculation that Time-Warner may sell off AOL and that the recent acquisitions and formation of Platform A is meant to make the company look more attractive to potential buyers or as a spin off company.

And with Microsoft’s bid to buy Yahoo rejected by Yahoo shareholders, AOL is once again mentioned as a potential merger partner with both of those companies as each seeks to thwart Google’s continued dominance online.

Last September there was talk that Platform A itself could be spun out and become public with an IPO. There was also wide spread speculation in the blogosphere that with the dial up business and its Web portal stagnating AOL might change its name to Advertising.com in an effort to clarify its focus to outsiders.

A Big Plan

A key element in AOL’s ad network strategy is the purchase of Bebo.com. Some industry observers say that in a best case scenario, Bebo can leverage the behavioral targeting capabilities from several of the PlatformA companies to better target certain demographics,and will be able to scale to reach a larger audience with AOL’s Instant Messenger.

While revenue from ads on social networks is likely to reach $1.6 billion this year – up from $920 million in2007 – the lion’s share of that money was from MySpace and Facebook.

“It’s hard to know what AOL is getting,” says Ryan Jacob of the Jacob Internet Fund, a firm that invests in Internet companies.

At the time the Bebo.com/AOL deal was announced inApril 2007 there was some debate in the press that AOL was overpaying for the network, given that Bebo’s traffic over the preceding three months had been relatively flat.The Silicon Alley Insider reported that many AOL senior managers were against the deal and that AOL president Randy Falco and COO Ron Grant alone pushed hard for the acquisition. AOL did not speak with Revenue regarding those issues.

In 2006, AOL’s first attempt at dipping into the social network pool (the launch of AIM Pages) was labeled by industry watchers as a misstep. The project was reportedly slow, weighed down by ineffective JavaScript and patched together from up to seven AOL systems. AOL replaced it with a simpler AIM Profiles platform within six months, aping a Facebook look. Since AOL merged AIM Profiles with its extensive Member Directory it gets about 170,000 page views a day, says comScore, however Facebook gets about 1.2 million. “As soon as it bombed, no one wanted anything to do with it,” an anonymous AOL product manager told TechCrunch.

AOL has also faced challenges on the search front. In2007 AOL went from a results page with links for copy, images, song files and other elements to a cleaner page that looked more like Google’s. Reportedly, the reasoning behind the change was that the diversity of search results was slowing down the pages from loading and that had an impact on revenue per search.

But revenue on search in the new format actually dropped to $156 million from $232 million in a previous quarter.

At the time, the top brass at Time-Warner claimed the search improvements would be good for traffic growth. But traffic in the following four months dropped with unique visitors down 0.2 percent from March to May 2008, to 30.6 million in November 2007 from (what), according to comScore.

“It’s troubling that they didn’t know what the impact of the search change would be,” Richard Greenfield, analyst at Pali Research, says. “This raises serious concerns about their ability to run the business and turn it around.”

The Transformation

From a content and functionality point of view, AOL maintains a variety of strong offerings. Its Truveo video search engine sports 100 million videos to search and is on track to total 1 billion by 2009. Its TMZ.com gossip site is on fire with 10 million visitors per month and a spin off TV show. AOL Music’s free music has an array of videos, news and concert tour information and is second only to Yahoo’s music portal.

AOL TV is the only site that hosts shows from all four of the major broadcast TV networks.

One AOL insider, who asked not to be named, says part of the problem is that AOL is unlikely to gain the same type of dominance it once enjoyed and being held to that old standard is unrealistic.

Before the dot com bubble burst in 2001, AOL’s userbase at its height was estimated to be more than 27 million people (it’s now about 10 million) all paying about $19 per month to stay connected. Its biggest coup was the much ballyhooed merger with Time-Warner in 2000. However, things quickly soured and by 2002, the combined company wrote off $99 billion. And, by 2003 the media giant had removed the”AOL” from its name and AOL head Steve Case from his chairman’s seat.

In 2006 AOL seemed to be making a comeback. It became free (it’s all ad-supported) and saw 46 percent ad-revenue growth in a single quarter, 49 percent the following quarter. Its stock seemed to spring back, too, rising as much as 40 percent in a six month period. At it’s height in 1999 AOL’s stock hit about $147. It currently hovers around $15 per share. AOL revenue in 2007 was $5.2 billion and its websites still draw 112 million visitors per month. Plus, it continues to have one of the most recognizable brand names on the Internet.

“If you just look at what AOL has accomplished in the last three years, it is amazing,” the source says. “I just don’t know how anyone can see that as failure. Most companies would kill to have achieved this level of success in online advertising.

The Changing Digital Landscape

2008 has shaped up to be a crazy year for online advertising – the writers’ strike drove people online and the presidential election and the Olympics are causing advertisers to boost spending in a down market. The timing of these factors has altered media behavior – making the business of online media anything but typical for the year.

How the advertising dollars that moved online in 2008 will be spent is a matter of much debate. Reports indicate that because the digital landscape is changing, advertisers are finding that the tried and true initiatives that performed well a few years ago are now considered passe.

As more and more individuals become their own tastemakers, advertisers need to take into account how users consume information. The days of pushing content have given way to users pulling the content that they want – making it tricky for companies to get a hold of their potential consumers.

At the end of 2007, AdTech and MarketingSherpa surveyed 421 Internet marketers about the tactics they would try out this year and where they plan to spend their budget in 2008.

In terms of the initiatives that marketers plan to increase more than 5 percent of the budget on in 2008, 32 percent of marketers cited PPC, 27 percent of marketers said they’ll increase their spend on behavioral targeting and 26 percent will spend it on rich media.

The survey found that viral marketing and advertising on online video sites, mobile phones and virtual worlds are among the emerging trends that marketers plan to check out this year. Marketers say they are encouraged to try out those tactics for the first time by their agencies.

Ninety-three percent say agencies suggested an increase in spending or begin spending on viral video; 87 percent were urged to spend on viral marketing using networking sites; 60 percent were asked to try wireless ads on mobile networks; and 62 percent said agencies advised advertising in games and virtual worlds.

In March, PQ Media reported that total spending on alternative media – including expenditures on online/mobile, lead generation advertising and consumer-generated media – is predicted to grow 20.2 percent to $88.24 billion in 2008.

Clearly, how companies approach their ad budgeting is going through a major metamorphosis. Of course, online marketing plans and their budgets depend on several factors – including the type of company, product, audience and goals.

The Big Trends

In terms of how advertisers budget their marketing plans, three trends have been shaking up the status quo in 2008 – paid search, social media and ad networks.

The biggest change in the last couple of years is that search ad spending continues to increase – it is expected to rise 32 percent this year to $15.5 billion in the U.S, according to J.P. Morgan Chase.

Some industry watchers call search the greatest advertising medium of all time and many marketers agree. However, Jake Fields, president and creative director of Treeline Interactive, warns that marketers need to be careful because it is easy to waste budgets buying keywords. Fields recommends Spyfu.com, a tool for finding competitors’ keywords.

The rise of social media is one of the dramatic differences between 2007 and 2008. Although a recent Forrester Research report indicates that spending is still relatively small, companies are benefiting from what it offers: consumers contribute brand messaging as opposed to only passively receiving communication from marketers.

There are many ways for new publishers as well as established brands to leverage social media. They could create buzz on a social network before the site launches or do some ad buys on social networks sites, which are cheaper than buys on traditional content like CNN because traditional advertisers are weary of social networks.

The Northern California ski resort, Northstar at Tahoe, has a campaign that encourages customers and staff to post videos and photos with the tags “Northstar, Tahoe” on social media sites such as YouTube and Flickr – with the prospect of being featured on the Northstar site or even the possibility of winning complimentary services. Fields explains that this initiative enabled Northstar at Tahoe to quickly expand its presence within these social media sites from a couple hundred entries to thousands of social media posts that positively represent their brand.

Also gaining traction in 2008 are advertising exchanges, which allow advertisers to bid for impressions on a CPM basis. Cam Balzer, vice president of emerging media at DoubleClick Performics, explains that ad exchanges bring the benefits of search marketing to display advertising – namely, the ability to test a large number of placements (an ad of a particular size on a particular site or even site section) dynamically (no minimum or locked-in budget), to bid more for placements that are driving strong ROI and less for placements that aren’t working.

More and more display inventory of an increasingly high quality is becoming available via advertising exchanges, and this trend should continue as publishers get comfortable with selling inventory in this way.

Balzer says that for a minimal investment, companies can test various approaches to building awareness of their brand. They can secure a large number of impressions at a low CPM to increase reach. If they are also selling advertising on their site, they could sell ad inventory via an exchange to improve the CPM yield of their site.

Regardless of whether companies attempt to leverage one or all of the big online marketing trends for 2008, the ever-evolving interactive space is moving away from cookie cutter campaigns that seem too inflexible to yield results.

To rise above the clutter, companies need to aggressively try the latest tactics like product placement in games and paid ads on networking sites. Mixed approaches are required – recent research finds that when search and display advertising are combined, clicks increase after people see the display ads.

Because there is no silver bullet, marketers need to constantly analyze and optimize their mix. Fields says that campaigns are all a matter of trial and error – it is important to try, pull back, measure, analyze, and then try again.

Content vs. SEO

Hamlet Batista, president and CEO of NEMedia, wants to change your content. He wants to change it so much that he can’t wait to get his search team cracking on it. It’s his bread and butter. And like any SEO outfit, he claims he can get your site optimized and ranking rapidly. But he also has a passion for words. He wants to respect your content – the carefully crafted articles, summaries and reviews you painstakingly labor over. “You have to write the content for the user,” he says. “If they don’t like it, they are going to leave.”

His mantra seems to echo throughout the Internet recently, especially as Google and other search engines keep refining how they rank your site. That means publishers have to keep toying with their optimization. There’s just no way around that, but it also means that some site owners will sacrifice the uniqueness of their content to get the rankings. So, the big question becomes, does doing good SEO cancel out the ability to have compelling content?

Batista points out that about 20 percent of queries people type every day are new keywords. He calls this the “invisible longtail” where there is always a set of new keywords publishers have to optimize for. He calls it a new opportunity. For some sites, just following the SEO 101 rules about using keywords in content and getting your tags and titles in order dilutes the single exclusive thing that makes a site unique – its tone of voice.

Taking a Tone

Attitude is often ignored as more search marketers chase the most recent algorithm changes in Google. But adjusting a site and content accordingly is always going to have only a short-term effect.” It’s important to understand the fundamental nature of how information retrieval works to really be able to get the most out of an optimization project,” LeeOdden, CEO of search and public relations consultancy TopRank Online Marketing, says. However, he adds that, “I often hear content purists confuse attempts at understanding how search engines work with gaming them and it’s just not the same thing. It’s the old debate about whether great content or great links gets you better rankings.”

Odden likens the question to debating which is most important, air or water. “Links and content are both necessary for competitive search marketing efforts. Emphasizing one over the other depends on the situation. Excelling at both is the ideal,” he says.

While understanding all that goes into making search engines tick – in terms of algorithms, methodologies and the importance of link building – is helpful to an overall optimization plan, Odden says that content is equally important.

NEMedia’s Batista goes one better and says that “Content producers don’t use the same words as a content consumer. “He says that users will write in terms of problems, not in keywords. If you’ve been robbed and you search for an alarm system, Batista says that most people will present the problem (“They broke into my house and stole my laptop.”) and not the solution (“I need an alarm for my 4 bedroom house.”). He likens it to the symptoms you relate to a doctor. Most people do not go into a doctor’s office and state, “I have a liver condition; I need Lipitor.”

Going Natural

That’s why some search professionals are advocating more natural language in content whether selling shoes or promoting CRM software. Write content naturally at first and do not worry about the page, suggests Batista, then go through it for keywords, adjusting tags, titles and link building along the way. Don’t get too focused on rankings for all the keywords on the page and neglect a sense of narrative. Batista says a lot of SEO people get too caught up in the technical side of optimization and ignore common sense. Lisa Barone, a senior writer at search consultancy, Bruce Clay, writes that content itself is changing. “It used to be that you go to a page, you open it, you parse it and you index it. Now, Web pages are increasingly based on AJAX. It’s like a Choose Your Own Adventure novel. It’s all little fragments of XTML. Crawling it is a hard thing to think about.”

“Sadly,” says SEO and marketing consultant, Anthony Gregory, “a lot of SEO copywriting is not very charming for humans to read.” He says to “remember that the goal of effective SEO writing is not only to improve your searchability and search engine rankings but also to lure customers to your site.”

Keyword stuffing – the practice of repeating the keywords in content copy until it looks like a gorilla wrote it – is a rejected method these days. He says the search engines have become too smart and can recognize this pretty easily. A site could be labeled as a spam site and create a big headache when trying to get it ranked again. He says that a site full of badly written SEO articles makes the site owner “look greedy and desperate for business.” A talent for writing for the user and the search engines is a rare one, and not one that necessarily comes when hiring an SEO professional.

A Balancing Act

There are some things that an SEO consultant may know that a publisher doesn’t. SEO consultant J. Walker says some search engine algorithms prefer pages with higher word counts. The highest ranking pages in Yahoo averaged 1,300 words per page while Google’s high rankers averaged 900 or so. Not that word count alone will propel your site to number one. She says that unless a publisher is able to pour money into paid ad campaigns, they should hire a copywriter or learn the SEO techniques for themselves.

Some writers struggle with striking the balance and do all they can to help keep a piece of copy optimized – even through adversity. Shailey Motial, a writer for content provider Chillibreeze.com questioned herself when assigned to write copy incorporating the phrase “statistics of home schooled in kindergarten” a minimum of four times in a 500 word article.”Was I corrupting my art?” she asked. “Am I guilty of diluting the form of writing by inserting predetermined keywords? I toiled through my first piece, a little unhappy, and a little lost about what to do. I grumbled, as is natural for all of us faced with change. However, pragmatism soon took over and I realized that my writing was of no use, if it did not get any readers. It had to be noticed and hence using the selected keywords would distinguish my work from the clutter,” she says.

Motial adds that the task involves pleasing a human as well as an algorithm – a unique mandate, perhaps impossible to realize completely. But while she says that links can come and go and be dead tomorrow, good, useful content will never be stale. That’s also why firms test their pages as best they can, testing being another revenue source for SEO companies.

Robert Bergquist, CEO of testing and optimization company WideMile, says that with conversion rates currently at .5 percent to 2 percent, sites can’t afford to not test thoroughly. “What they haven’t learned is what to do once they come into the site,” he says. Batista explains that’s why he puts an emphasis on thorough keyword research and link building.

Beyond that, paying for syndicated copy to post on a site has proven popular for many, especially site owners with product-specific sites that can benefit from articles on their niche or theme. Outfits such as uclick.com, Content Infusion, and YellowBrix which bought out syndicated content pioneer iSyndicate, specialize in selling copy from cartoons to political columns to news of the day. Copyblogger.com also offers a handy list of tips to make you a better copywriter.

SEO and online marketing blogger Andrew Girdwood goes so far as to classify a distinction between SEO and “ethical SEO.” Simply put, ethical SEO is about allowing a search engine to see what your website is about as clearly as possible without any”black” arts like keyword stuffing, confusing URLs, or dubious link building. He quotes Google’s “evangelist” Adam Lasnik, who has said that “our algorithms want to see something that’s a happy medium cleanly between: Extreme A — Not listing relevant terms at all on the page. ExtremeB — Focusing on increasing keyword density to the point that your English/Writing teacher would thwap you with a wooden ruler. Hard. Repeatedly.”

That advice speaks to the difficulty of saying once and for all what is the right balance. Girdwood says some believe all you have to do is reach a certain percentage of keywords per page to rank well – anything over that gets labeled as spam. Lasnik has also said you can’t believe that. “There is nomagic number,” he says. Odden adds that “a combination of content as well as social networking, link networking, public relations and gaining editorial visibility as well as viral and individual link solicitations will all work together synergistically.”

Many believe that while good, natural writing is key, finding good writers is a dilemma. Affiliate marketer Kim Rowley finds good writing in family. She employs her two aunts to help her write fresh copy for her many websites and she keeps a pen and paper by her bed to jot down new content ideas. She keeps her blogs personal because it goes well with the kinds of sites she has on baby clothes, florists, coffee, pregnancy and coupons. She adds that some of the best content she’s received is by asking visitors to submit posts. This way, she says,”the content is true and unbiased.” She also builds content based on traffic stats and can write more for a particular site if there is a traffic spike.

Creating Compelling Copy

There is little consensus on how to write truly engaging copy while hitting all the SEO marks, but some of the key elements include:

  • Write naturally and try to add SEO elements later.
  • Use unique ideas for content instead of relying on cookie-cutter advice from SEO books.
  • Use consistent title and tag information – make it straight forward but descriptive.
  • Narrow keywords to the most strategic ones. Don’t over-stuff with keywords tangential to your topic or theme.
  • Think of the descriptive tag as a story and not just a spot to place keywords.
  • Make sure keywords match what people are looking for.

Matt Cutts, Google’s search guru, weighs in on his blog about content as well, warning that “if you put in time and research to produce or to synthesize original content, think hard about what niches to target.”

Cutts advises not to begin with broad articles about “porn/pills/casinos/mortgages” but with a smaller niche. “Look for a progression of niches so that you start out small or very specific, but you can build your way up to a big, important area over time. There are a lot of niches that just take sweat equity. You could be the SEO that does interviews” Or the SEO that makes funny lists. Or the SEO company that provides WebMasterRadio. Or the SEO that makes podcasting easy.”

The right balance may be yours to define. J. Walker says that “SEO methods are specifically designed to increase traffic to your website. Marketing techniques are designed to keep that traffic on your website, and encourage visitors to make a purchase. Your challenge is to find the delicate balance between them.”

Leagues of Their Own

Since the days of the gladiators, sports fans have had an irrational bond with their favorite athletes and teams. Feats of athleticism evoke eruptions of euphoria or a tidal wave of tears as a game’s final play unfolds.These strong emotions create an indelible brand loyalty that remains long after the season ends.

Marketers are learning to exploit these relationships in new ways by expanding the scintillating sights and sounds of sports beyond television highlights to broad online distribution. By enabling fans to personalize their interactions with multimedia content and by bringing the game to their favorite arena – be it a social website or a personalized Web page – sports leagues are creating new online marketing opportunities that are increasing revenue. Typically, online merchandising of memorabilia and apparel is not handled by sports leagues’ online properties and is therefore not addressed in this article.

Sports leagues and their broadcast partners have historically been conservative in granting permission to use video and audio from games online. This idea was based on the belief that making highlights or live broadcasts available dilutes the value of live games and would reduce advertising revenue and attendance. For example, in the late 1990s, local radio affiliates streamed broadcasts of baseball games online for free. But within two years, Major League Baseball ended the process, allowing audio webcasts to be streamed only through the MLB.com website through paid subscription services.

Baseball continues its policy of charging to listen togames online today. Dinn Mann executive vice president of content for major league baseball, says the league listened to fans and for the 2008 season reduced the price of a season audio subscription by $5 to the former price of $14.95. “We tipped our cap to fans who complained,” he says.

Requiring customers to pay for live audio provides an alternative revenue stream, according to Mann. “Having a subscriber base and not relying entirely on advertising is of strategic importance,” says Mann. Subscriptions,which require submitting an email and physical address, provide an avenue for MLB to pursue online and offline direct marketing.

Major League Baseball also charges for video streaming of live games and restricts viewing to any games that are “out of market” from where the customer lives. This protects the lucrative contracts with cable companies and local TV stations that are the bread and butter of their revenue. Baseball game viewing- despite the lengthy 162 game schedule – remains largely a pay-per-view world, Mann says, because “some things are still worth paying for.”

This year is the first time that baseball fans can watch archived broadcasts of full games for free, something that MLB is”experimenting with,” according to Mann. The archived games do not feature advertising, but MLB is “exploring the right relationship,”Mann says.

Growing the Audience

Sports leagues are now taking a page from online marketers’ playbooks by encouraging consumers to personalize their experience in interacting with content. Instead of going the affiliate marketing route, the digital sports media companies are focused on partnering with social networking sites and other media companies that have established audiences of fans. The strategy is to encourage consumers to link to and save content on the sites where they visit on a daily basis, enabling fans to mash-up multimedia content to create something new from existing content. Marketers who join the roster of their online partners will gain a share of the spoils in growing their audience and reaching a new generation of fans.

At the start of the 2008 season, MLB.com announced a partnership allowing Yahoo.com to stream games and highlights.Yahoo will also sell ads against both pay and free content, although thus far the video has been distributed largely without ads. Through this agreement, MLB.com gets access to Yahoo’s large audience and the two companies share revenue from any transactions facilitated through Yahoo.

Professional and collegiate sports leagues have learned that embracing younger audiences on their home turf is the quickest path to rapidly growing an audience. The NCAA, in partnership with CBSSports.com, opened the video streams of its college basketball championship tournament to a wide variety of publishing partners with great success. This enables fans to see the content where they want it delivered.

Just a few years ago, video streams of March Madness games were protected from the majority of the population as if they were enriched uranium. The subscription service generated just $250,000 in revenue annually. But over time online distribution was proven not to be hazardous to the health of television advertising revenue. Subscription fees were replaced with free streams, and then the NCAA/CBSsports.com embraced social networking (See sidebar).

Free live game webcasts have paid huge returns, according to Jason Kint, senior vice president and general manager of CBSSports.com, which manages the online video distribution of the NCAA tourney. CBS Sports created an embeddable media player that contained multiple advertising locations, in-stream ads, and fixed positions sold to sponsors.

Online “consumption is additive and not cannibalistic”of the TV audience of live college basketball, Kint says.The streams were primarily delivered to people who didn’t have access to TV, including office workers. The media player’s “Boss Button,” which instantly hides daytime viewing at the office, was clicked more than 2.5 million times, according to Kint.

People will continue to watch games on TV if they can,he says, as the final championship game was the most watched game on TV and had the smallest proportional share of online viewers. Industry watchers speculate this type of arrangement may lead to new relationships between those who promote other events, such as concerts or entertainment awards shows and affiliates who can deliver a targeted audience.

Content owners looking to maximize their audience for ad-supported content should also spread it far and wide, Kint says. “Don’t expect users to come to a URL – bring the content to them.”

Like its collegiate counterpart, pro basketball also recognizes that working with existing online communities enhances rather than endangers its own digital efforts. For the past two years the NBA has “embraced the idea of distributing content beyond NBA.com” and is partnering with video sharing and social networking sites, according to NBA’s Vice President of Interactive Services, SteveGrimes.

Grimes says working with video sites such as YouTube, Joost and Hulu and social networking sites such as Facebook, Beebo and MySpace has increased fan engagement. The NBA makes highlight videos available to publishers such as Hulu and Joost to strengthen its brand awareness among younger audiences who are consuming a greater majority of their video online.

The NBA is encouraging fans to create their own highlight reels by mashing up content available only on NBA.com and embedding it on their social networking sites. “Fans that love the NBA will come to NBA.com, but those who like it will visit other sites,” Grimes says.Widgets that enable sharing of content are delivering interactivity to sports media. NBA’s widget page (www.nba.com/widgets/) contains embeddable code for showing highlights, up-to-date-scores and photos. The NBA has sponsorship deals with companies including Lenovo and TMobile for some of its widgets to gain revenue from content that sits on other sites, Grimes says. The league has also launched a fan application on Beebo to reach its audience.

“(Sports) sites are starting to realize the power of how content can be aggregated across the Web (using widgets),” says Tad Greenleaf, the media team lead, for Omniture Consulting. Greenleaf, whose company has measured fan engagement for the websites of all of the professional leagues, says that while some leagues have hesitated on widgets and distributing content to other sites, they will do so as long as they can maintain some control.

By contrast, MLB has not released any widgets as yet because “we haven’t reached the point that the content needs to reside on their (fans) pages,” says MLB.com’s Mann. “… We have taken a long term view and not just rushing to the tool of the day.”

Measuring Success

Most of the sports leagues are more concerned about building traffic and fan engagement than selling tickets or jerseys through their partnerships with publishers, according to Ominture’s Greenleaf. His company built a social networking website for the Indianapolis Colts (www.mycolts.net) that greatly increased traffic to the NFL’s Colts site by enabling fans to comment, share content and create their own blogs. The leagues want to measure views of videos to see how they can be used to retain consumers, Greenleaf says. “How much can a piece of content drive people into the site, or are they hitting and leaving?” He says sites want to see if the relationships have “velocity” and are encouraging users to “dive deep” into the sites.

Greenleaf says another strategic play is for leagues to buy keywords about teams, players or about timely topics in the news because the leagues “don’t want them going to other places on the Web.”

“The key thing is that you need to control [the environment] if you are the owner of the content,” says Robert Tuchman, the President of TSE Sports and Entertainment, which develops corporate marketing programs around sports. Tuchman says those who market sports leagues have yet to capitalize on the legion of diehard fans that follow their sport. “They have to get behind their existing market or other organizations will control their inventory.”

Tuchman says while social networking around video highlights is the hot topic today, it should be part of a larger strategy that integrates all media. “Social networking is just one aspect. You need to sell combined media packages” that include TV, print and outdoor, according to Tuchman.

Scoring With Mobile

The days of learning how your team fared by reading the morning paper are long gone. Now fans want to know about scores, injuries and trades immediately, and the league sites are marketing to this perceived need. Through mobile-device enabled websites (WAP) and SMS and text-messaging services, sports leagues including the NHL, NBA and MLB are generating revenue from on-the-go consumers.

For the 2008 season, MLB.com added video alerts to its text alerts subscription service. The alerts highlight great catches or home runs from a fan’s favorite team that will be sent to handsets within three minutes after a play happens. The NBA’s “mobile to go” service offers team and player text alerts as well as a service customized for fantasy league fans.

Quattro Wireless launched the mobile version of the NFL Draft site for the annual draft, which took place in April. The site, which included photo galleries,articles, draft prospect pages, player analysis, and the full draft order, was updated in real-time as the college players were selected by NFL teams.

“The NFL is trying to continue to give their fans more coverage wherever their fans may be,” Lars Albright, vice president of business development for Quattrosays. “The NFL found that the draft is turning into something of an event … It’s becoming a marketable event.”

Sports leagues and news services originally charged subscriptions for notifications to mobile phones and handhelds, but they are starting to shift to ad-supported services, says Eric Eller, senior vice president of products and marketing for Millennial Media. Eller, whose company operates two mobile advertising networks (CPM and CPC) that aggregates demand, says one of the big trends is in-game mobile marketing.

For example, during a game, fans in attendance can be shown messages on their mobile phones that are linked to messages being shown on the big screens that sit high atop the stadiums, Eller says. Mobile phones “will play an important part of sports marketing around events,” he says.

Sports leagues have learned that by making highlights more widely available and engaging on their favorite online destinations, they can grow both their television audience and put more fans in the seats.

Poaching Prohibited

What’s in a name? According to Shakespeare’s Juliet, not much, but if the name is trademarked it has value worth protecting. Successful companies spend millions developing a brand name and promoting their Web domains online. Some publishers, however, treat others’ trademarks like their personal ATMs by generating commissions through misleading ads.

This practice has become alarmingly present during the past few years and is often referred to by a variety of names: trademark poaching, trademark bidding, domain name poaching and PPC domain name bidding. Kellie Stevens, president of Affiliate-FairPlay.com, says it’s a difficult issue to discuss because the terminology is still not clearly defined or even completely understood.

Some in the industry say it’s actually misleading to call it trademark poaching or trademark bidding. Instead they refer to it as PPC domain name poaching because it’s really a subset of a merchant’s trademark-type words, namely their domain name. Some industry watchers say that using the phrase “trademark poaching” or “trademark bidding” has connotations of it being a legal issue under existing trademark law, but it is really a violation of the terms of services contract between the merchant and the affiliate.

Regardless of the various terminology (which is often used interchangeably), in its most conservative definition, this practice involves a keyword search on a trademarked term or the merchant’s domain name that triggers a pay-per-click ad. The ads use a merchant’s trademark in the copy, and through clever coding, the display URL appears to consumers to be from the merchant.

The way it works is that consumers type an address in places other than the URL bar – such as the desktop Google bar or into their favorite search engine – and are taken to the merchant’s site or an affiliate site via an affiliate link, thus giving an affiliate a commission when none is deserved.

The basis that this commission is unwarranted is the idea that if a consumer types in a merchant’s URL or domain address, it is clear they were seeking that merchant and the affiliate provided no added value in getting the potential buyer to that destination. Therefore, the affiliate should not be compensated.

The origin of today’s trademark poaching problem dates back to 2004, when Google changed its AdWords policy to allow keyword bidding on trademarks and associated Web domains. Cunning individuals began joining affiliate programs and designing PPC ads to appear to come from a well-known merchant. When clicked on, the ad directs the consumer to the trademark owner’s site through a link that inserted the affiliate ID, therefore generating a commission for any resulting purchase. Voilà! No website is required – the ad creates a straight path to easy commissions.

WHY IT’S ATTRACTIVE

Trademark poaching is attractive because of the low barrier to entry. For just the price of a PPC ad, publishers can quickly generate handsome commissions without the usual affiliate administration overhead, and reducing the steps from click to purchase increases the likelihood of a purchase.

One PPC affiliate, who asked not to be named, says there is a “pack of about 30” PPC affiliates that closely monitor the list of new merchants at every network and “crank up campaigns on them all” in order to profit from this behavior.

The anonymous PPC affiliate says “it takes less than four minutes to create a new campaign for a new merchant,” and that this pack of rogue PPC affiliates “don’t read the terms of service” from the merchants and they “don’t care about size – they cover them all.” He says it’s like a competition among this “pack” and that they do this for hundreds of merchants.

“There’s a trickle of others trying it from time to time as well, but the way Google and most search engines work, historical performance and clickthrough rates determine who gets the spots. They’re all competing for the one spot that lands on the merchant’s domain,” the PPC affiliate explains.

He went on to note, “That’s a ton of commissions paid out for almost nothing. If a merchant can easily do this PPC themselves, why pay an affiliate a large percent commission for doing it? It’s the branded traffic the merchant has earned; giving it away to a lazy poaching affiliate is just ignorant.”

Scott Hazard, who runs the website Cooperative- Affiliates.com, says ads that mask their origin in this manner confuse the marketplace and take money away from the merchant and the affiliate channel.

“It’s more of a problem for big brands” with recognizable names, Hazard says, as the popularity of the name as a search term will generate the high volume of traffic needed to create sizable commissions.

However, another school of thought says that although big brand merchants are often targeted more – thus losing more money overall – it’s a problem for merchants of all sizes. In fact, many smaller merchants are less aware of the issue and how to police it, making them easy marks.

While determining exactly how widespread this practice has become is difficult since it’s hard to track throughout the entire industry, a PPC consultant, who asked to remain anonymous, says, that “in some smaller programs I have worked with, as a merchant consultant and/or as a PPC consultant, as much as 40 percent of their registered affiliate sales are coming from this poaching.”

The only penalties for being caught poaching is getting kicked out of an affiliate program and having your commission withheld. That’s a small price to pay compared with the upside of undetected revenue. (See the “Trademark Ads in Legal Limbo” sidebar on page 048″ for details on other potential penalties.) Trademark poaching challenges merchants because as quickly as affiliates are kicked off, others are ready to take their places, according to Hazard.

Hazard launched the website TrademarkPoachers.com in August of 2007 to provide advice and education about the practice. While his site has increased awareness of the problem, “It doesn’t seem to be happening any less,” he says. Some say that they have anecdotal evidence that nearly 50 percent of pay per click is based on trademark poaching.

Chuck Hamrick, an affiliate manager for AffiliateCrew.com, started noticing trademark poaching in mid-2006. He could see that it was impacting overall revenue for some merchants because after he removed the poachers, the affiliate channel earnings went down, while organic and paid search revenue increased by larger amounts. This showed that trademark poaching “was cannibalizing our other efforts,” he says.

In the last two years, Hamrick caught a number of well-known affiliates poaching. He gave them “two strikes and they were out” of the program. If they didn’t take down the offending ads, he would reverse their commissions. “If it happened again, it was not by accident,” he says.

TRACKING THE POACHERS

Still, merchants that do not protect their trademarks from poachers are like retailers that allow customers to walk out with the price tags still on the clothes – if you’re looking the other way, someone will inevitably take advantage of you. Although networks can help with detection, it is the affiliate manager’s responsibility to function as the security guard and prevent these losses.

Fortunately for merchants, tracking this nefarious activity is relatively simple. Reviewing commission reports is one effective method for identifying trademark poachers. High conversion rates or affiliates who rise too quickly in volume of referrals are signs of potential trademark poaching, according to Dave Osman, senior vice president of operations at Commission Junction. “[Trademark policing] is one of the biggest challenges that the affiliate channel has had,” Osman says.

Managers can bid on their trademarks through Google AdWords to see the affiliates that are also bidding as another method of identifying potential poachers. Checking data for the location and time of day where commissions are generated can also help to identify poachers. To head off potential poachers, merchants can specify with AdWords that bidding not be allowed on their trademark or the trademark as part of their domain name.

Google will take down ads from affiliates or competitors that include domain names or URLs if the trademark holder complains, according to the policy stated on the AdWords website. However, Google will not block keyword bidding on trademarks and will not otherwise mediate disagreements over trademark poaching.

THE CASE FOR AND AGAINST

However, there are some merchants that will ask their PPC affiliates to do trademark bidding. AffiliateFairPlay’s Stevens says that there are pros and cons to this tack and merchants that allow it employ the rationale that they would prefer to see their affiliates ranking higher in the search engines than their rivals.

However, these merchants often fall into two categories – those that understand the issue and allow it to happen; and those merchants that are not aware of the implications.

When a merchant understands it and still allows domain name bidding, it’s usually because the affiliate manager can make themselves look good to superiors by showing lots of sales; or the merchant wants to inflate their EPC and sales volume to make their program’s metrics look attractive; or the merchant has made a deal with someone – such as a legitimate consultant – who in exchange for the sweet, low-hanging domain name fruit, obligates themselves to do something else, like pump those margins into deeper product and general keyword PPC on the merchant’s behalf, according to a PPC expert.

For those who don’t completely understand the issue, the reasons to allow it are slightly different: The merchant believes these posted sales are the result of “power” affiliates’ magic and doesn’t understand they’re allowing their brand, via their site name, to be leveraged by someone who does only that; or they have no idea what’s happening and believe these are actually their best affiliates; or someone such as a PPC agency or an outsourced program manager has them hoodwinked into believing this is a good practice.

However, there are instances when this type of bidding can be helpful, according to some PPC experts.

If a merchant has chosen to have coupons, then a search for “merchantname coupons” will be filled with SEO coupon affiliates ready to meet that need in the engine’s natural organic listings. The same principle works for reviews of merchants’ product or services. Most often, consumers seeking reviews don’t want to visit a merchant’s site. Instead, they want a supposedly unbiased view. Therefore, allowing an affiliate to bid on MerchantNameReview.com might be desirable to the merchant.

The Big Decision

One search expert, who asked not to be named, says there are two questions a merchant must ask before making the decision on domain name bidding.

No. 1: Do I allow my affiliates to bid on “MerchantName.com” where they send people directly to MY MERCHANT website and where they earn a commission?

No. 2: Do I allow my affiliates to bid on “MerchantName.com” where they send people directly to THEIR AFFILIATE website and where they earn a commission if someone clicks through to my merchant site from their affiliate site?

Most observers say the answer to the first question, should be – “No way, this is the merchant’s traffic and they earned it. It’s fat with ROI (often a 19x return) and it’s theirs.”

On the second question, the answer is not as clear. Allowing affiliates to do this might keep competitors from squatting on the name with their PPC ads. Search engines could see the merchant’s ads as more relevant because the domain name is the same word as the keyword, meaning that the merchant should be able to still occupy the top search spots with ease.

The Role of the Networks

Networks including Commission Junction offer trademark policing as a value-added service, and specialist companies such as Trademark Tracker and Name Protect can search out poaching ads as part of their broader trademark protection services.

While the industry is in agreement that trademark poaching is unacceptable, there is little consensus on related trademark use by affiliates in their advertising efforts. From keyword bidding on trademarks to the use of trademarks in ad copy, merchants, ad networks and affiliate networks each have their own rules and perspectives on what is permissible, and often those vary depending on individual contractual relationships.

“Ultimately, trademark poaching is in the eye of the beholder,” says CJ’s Osman. “The burden is on [affiliates] to learn each of their [merchants’] rules and to receive permission before incorporating trademarks into their ads.”

Buying a trademark as a keyword in conjunction with other words, such as “iPod and covers” is often allowed or encouraged because search engines do not want to exclude “broad match” terms. With the permission of the trademark owner, trademarks are also permitted as part of the affiliate’s display URL (e.g., www.affiliatesite.com/coupons or /reviews).

Through statistical data and the ability to observe dozens or hundreds of merchants at the same time, the networks have the power to stop this practice, but some think they don’t go far enough in their efforts.

“Good networks will show the referral URLs to the merchant, making it easy to find these poachers if they look, and reverse their orders [don’t pay them] and remove them from their affiliate program for violating the rules,” one PPC expert says.

According to one PPC consultant, who asked not to be named, the networks don’t ban this bogus practice for a variety of reasons – all related to money:

  • Merchants who want to shine their metrics (and show their bosses how well their programs are running) would go to another network.
  • Unscrupulous OPMs (outsourced program managers) would suggest alternative networks for new clients.
  • Unscrupulous OPMs would migrate programs to other networks, and when the reported sales went up, they’d be proven “right” about suggesting the migration.
  • Some merchants would not be able to make deals with their PPC consultants or agencies, and a new network that allowed this practice would be the only alternative.
  • Many less-than-savvy merchants would accuse the network of firing their “best” affiliates.

Because merchants have a right to run their own program, networks don’t and shouldn’t take an all-encompassing stance against it, the PPC consultant says.

Commission Junction’s policy is not to allow the use of trademarks in third-party ads without the express permission of a merchant, according to Osman. The rules that each merchant sets depend on their individual objectives, with some opting to be more flexible in allowing trademark use, he says. “All [merchants] do not view their [affiliates’] use of their trademarks in the same light: They have different marketing needs and therefore make allowances when necessary. For this reason Osman says, “I don’t think consistency [across the industry] is possible.”

Affiliates bidding on a domain name and sending the traffic to their own sites is seen by some but not all in the industry as trademark abuse. “One type of trademark poaching – typo squatting – is the intentional use of a misspelling of the trademarked URL, and is considered trademark infringement by most marketers,” says Osman. In recent years, companies Dell and Lands’ End successfully sued affiliates for generating commissions through typo squatting and direct linking.

Merchants can best protect their trademarks by spelling out what is allowable in their contracts with affiliates and by educating their network partners. Network ShareASale provides a dedicated area for posting banned keywords and text explaining the merchants’ choices, easily available referral URLs marked on every sale so the merchant can see the details, a feedback system for merchants to tag terms-of-service-violating affiliates to others, and other mechanisms making implementation of a merchant’s choices easier and more effective.

“Each merchant has different ideas when it comes to this issue, so our goal is to try to make as much information as possible available to both the affiliates and merchants on our network so that they can run their programs as they wish to run them,” says ShareASale President and CEO Brian Littleton. He encourages merchants to upload their individual agreements as well as a list of prohibited keywords so that all parties are clear on what is allowed.

One observer says that merchants need to ask the networks different questions instead of just asking for advice on whether or not they should allow domain name bidding in their programs. Rather, the merchants should be posing questions to the networks such as: What will the networks do for me? What tools will they give me to support and facilitate my choices on these issues? How will they help me police a decision to disallow it and what repercussions/tools will they give me to stop people who do it and won’t stop?

Domain name poaching is not going away anytime soon, but search experts promoting best practices say that savvy merchants and affiliate managers that educate themselves on the complex issues will realize the practice is a shortsighted path to profits, and ultimately bad for the entire industry.

Hooking Search Talent

“As search marketers, we are the insiders. We are supposed to know and understand search in all of its dimensions. We are moving into uncharted territory. It is not territory that I am excited to explore, but I will go there nonetheless,” writes Amanda Watlington of SearchForProfit.com.

Despite her status as an expert on blogs, RSS and search marketing, Watlington is still trying to put a finger on what may be coming down the pike for search this year. Her pondering may sound a bit gloomy – because in many ways, things have never been better for search.

According to GroupM, search will make up about 65 to 70 percent of the measured online advertising in 2008. That’s up from 50 percent in 2005. Also consider that search budgets within brands have become bigger; search marketing professionals now easily have three to five years’ experience handling search initiatives; and most excursions on the Web start at a search engine.

Yet there are really no guidelines on what search-related skills a search team must have in order to propel a company forward – not written down in the company manual anyway. “Knowing” search and running a search team for your company are entirely two different things. Knowing how to budget for search and staying abreast of search innovations is something few teach.

A recent survey by the Search Engine Marketing Professional Organization (SEMPO) stated that in-house search managers are now handling budgets on average of $200,000. However, up to 40 percent of those managers are shepherding that money with three years or less of professional search experience. About 26 percent have five years of experience or more.

Keeping Up With Search

The uncharted territory is the constantly changing nature of the search game. Many search veterans will say that learning search is an ever-changing discipline, fraught with a learning curve that never straightens out. They say that to hire a search manager or search team means upper management must look beyond the experience they have on paper and judge a pro by their passion and innate intelligence.

It’s paying off for some. SEMPO says that about 49 percent of SEM professionals earn $50,000 or less. About 43 percent earn between $50,000 and $100,000 per year. Only about 4 percent of those with five to seven years of experience make more than $200,000 per year. “It’s a respectable career path. I know I wasn’t making 70 or 100 thousand dollars a year when I was three years out of college,” Rob Crigler, co-chair of SEMPO’s in-house committee told SearchEngineWatch.com.

“I equate it to sports – the people who don’t sleep and work really hard get ahead. As a numbers-based job, they attract the hard workers,” says Wil Reynolds of Philadelphia- based SEER Interactive, a search engine optimization company. He says that the tools – software and Web-based analytics and helpers in choosing keywords – are all pretty good now. The ones who rise to the top are the ones with a kind of “street smarts.”

There are some recent attempts to educate the search-interested. Google recently launched a program called Google Online Marketing Challenge, which partners with marketing college professors to teach Google’s popular Ad- Words. Students take a $200 budget and apply it to a PPC campaign for a client. Students then manage the AdWords campaigns including coming up with a pre-campaign plan, manage the ongoing campaign and evaluate post-campaign numbers. The students select keywords, write ads and keep tabs on their clicks. Google then judges the work on up to 30 different criteria and offers an actual prize – a week at Google’s headquarters.

SEMPO also offers distance learning courses in search marketing. Students are introduced to the “foundations” of search marketing; advanced how-tos on SEO; and PPC training. The courses are offered online and can include interaction with “SEM professionals” and grading by SEMPO volunteers. SEER also offers some SEO online video tutorials on its site covering keywords, competitive tools, link building and best practices.

SEM expert Todd Malicoat at stuntdubl.com helps organize an SEO class and an online marketing training class using online courses, podcasts and some PowerPoint. However, he points out that there is really no regulation within the industry and that anyone can build a website and say, “I do search,” and have it be technically true. He notes that the search community has an active base, and learning from these people would be different from the trial-and-error training someone may get when they do it alone.

Reynolds says this kind of education is out there for people to use, “so tenure isn’t important.” What people should really have, he says, is marketing acumen. “If you want to be second place, you go to search training,” he says. “The same materials are available anywhere. But the people who rise are the people that take the basic info and go to the top.”

Matt Spiegel, CEO and founder of Resolution Media, an SEO and PPC consulting firm, says that those with higher educations in marketing have received “little exposure to this new marketing world. The vast majority of recent graduates in advertising and marketing have had little course work specific to online advertising – much less search.” He says to not assume institutions of higher learning will adapt quickly. “Instead, we need to look within the industry for help.”

Rand Fishkin, CEO of Seattle-based SEOmoz, a search marketing consulting company, says that three years’ experience is “quite a bit and is good given the industry.” He says that if he were to interview a search pro for a job, he’d simply ask the candidate to explain how Google works. “How does Google do its rankings and what makes a difference; and how did you pick up these things?” The analogy he draws is with medicine: A doctor should be able to tell you how the nervous system works off the top of her head.

Spiegel says there is a talent shortage. He says to work for his company you do not need a shopping list of skills. “You have to invest in people in this business,” he says. If you are new to the industry, he adds, and learning from the ground up – you get about 18 months to learn nuts and bolts. “When we hire, if they come from another agency, I expect that within 90 days they will be up and running – that you will know enough about search to manage a client list but you may have to learn keyword placement, etc.” He says he has hired one-person shop owners. He looks for attitude as well as skills and a need to “thrive on uncertainty and realize they are at the beginning of an industry.”

Evolving Search Skills

Among the skills that SEER Interactive’s Reynolds looks for is the ability to problem-solve. “Do you like to solve puzzles; things that stimulate and test the mind?” he says. “I would follow that skill with a lack of fear. There are tools are out there to do short-term tests. But are you not afraid to fail? I continue to see more come into the space, but that doesn’t mean they are all going to be good. Anyone with a Net connection and phone can be a search firm tomorrow. That glut can lead to substandard talent.”

Since search seems to be one of those areas that is changing and improving all the time, a search pro needs to stay locked in step with the new. Mike Grehan, CEO of Searchvisible, experts at organic and paid search headquartered in the U.K., has said that it’s getting harder to keep good organic search results on the first page. “What used to work in the good old SEO days won’t cut it in the future.” He notes that while search engines themselves are innovating all the time, search engine optimization is not – meta tags, alt tags, some social media and header tags are still the rage but are seeing their results wear thin.

Constant adaptation is a valuable watchword held by Danielle Leitch, executive vice president of client strategy at MoreVisibility, a search, design and interactive marketing company. She has said that she sees “adaptation of the industry as a whole shifting from just acronyms – SEO, CPC, SEM – to ‘interactive marketing.’ As a result, I believe agencies will become more full service than they had been – which could lead to mergers or partnerships in that area too.”

As the changing landscape continues to shift, SEOmoz’s Fishkin actually sees a constant in search professionals’ qualifications. “To me, the most desirable are those people who started a site in 1998 and have learned from doing. I am always impressed with those guys. They are rare guys.” The other breed of search marketers are those who may have a background working at another agency doing search or with a portfolio of sites they have launched. They may have been a junior marketer on this or that team and they did a search campaign and now they say, “I’m lost.” Now, companies have to spend six to 12 months training this person. He adds that MBAs may spend too much time projecting and doing nothing. “In search, we have to do.” In the end, you can only lose revenue for a few weeks and still correct it and change, he says.

Spiegel says too many companies may hire one person to head up search and leave it at that. “If I were running a company and had to hire one person, I wouldn’t want to put all my eggs in one person. I would hire an agency,” he says.

Searching for Education

Fishkin has put together a primer for those looking for search pros. He states that recruiting might be the hardest part of the work. While portals on the Web offer loads of candidates, the passionate ones are usually found in the Web places where the “young, Web-savvy and tech-obsessed” hang out. In addition to their skill set, you and your company will want to ask how long you will need this pro for; what are the primary priorities for them; and do you want this person or team to grow with the company?

When building the team or fitting the search person into the structure of your company, you need to measure the scale of your search efforts – is your company large enough that you will need more than one person or team? Measure what kind of ROI you want for each segment if you choose to break up the search division into many platforms. And as you carve up search areas and responsibilities, you will still need a person to oversee the divisions.

For training, he recommends letting team members build their own BlogSpot or Yahoo360 sites and experiment with trying to rank them. He likes to give them two to four weeks to “read, learn and get involved.”

SEER’s Reynolds uses himself as an example of the kind of search pro he’d admire. “I loved the game,” he says, “so that’s why I know it well. In the beginning, I loved computers and marketing but also had the cajones to knock on doors.” He says when he got started in search it was a constantly changing and highly competitive field with no rules written. Still is. “Three-year tenure is about all you need – now I have eight.”

MoreVisibility’s Leitch has stated that in the coming year the focus should be on colleges and universities injecting “real world” classes into their business classes. “Those that we will hire in the future need to have solid fundamentals in interactive marketing and search ” regardless of your role in a company or field of interest.”