eBay has recently seen a sharp drop in traffic as they cut their affiliate stream and Google ad spend.

When you are a default category leader you no longer compete against others in your category. You compete against other categories. Google and Amazon.com understand that. Microsoft maybe. eBay no.

eBay could have used the last decade to create communities around buying, selling, and collecting...taking a slice of any transaction as they turn buyers to sellers or sellers to buyers.

• They could have offered awards for collector of the month, seller of the month, buyer of the month, and done interviews with the winners.
• They could have a section called deal hunting where they offer tips on how to find the best deals.
• They could have a section called "good as new" where people talk where people talk about old items that are a bargain, and in some cases even better than new.
• They could have allowed sellers and buyers to build editorial communities and collections on the eBay site. Control the conversation and control commerce.
• What if eBay could have got you to tag just about everything you owned, and then told you roughly what it was worth (based on recent transaction data) and had you put a buy it now price on it? CueCat was a failure, but eBay has a much better platform to market such a device on.

Instead they did nothing. They lost a decade to improvements in search, Amazon.com, open source software, blogs, and the rest of the web.

Rather than improving their network feedback mechanism and making a deeper network, the new eBay strategy is to try to be more like Amazon, but that won't work. While eBay spent a decade alienating buyers and sellers (with no innovation, shifting fees, encouraging a market lemons, etc.), Amazon was off building user loyalty. And now Amazon is out working public relations with a holiday customer review team and extending their platform in new dimensions - offering digital downloads, the Kindle, selling utility computing, and selling their shopping platform.

Staying competitive is more of a mindset than an event. The decay happens long before it impacts revenue. And by the time it impacts revenue there isn't a lot of time to fix things.

• Under-monetize to buy mindshare. (almost every category Google is in)
• Offer a free version to make sure everyone who may want to has a chance to experience your product and/or service. (almost every category Google is in)
• Offer something that forces people to keep coming back to your website. Alternatively, bundle your stuff into the browser. (the Google Toolbar is huge.)
• Invest heavily in distribution deals and public relations. Keep making small changes and talking about how important they are so you stay in the media. Maintain that your success is because superior products even while you are buying marketshare.
• If a business model competes with your model, try to guide the conversation and get market participants to attack each other to your own benefit (this, above all other reasons, is why it is not smart for "professional" SEOs to publicly endorse outing each other...nobody wins but Google).
• Offer free or low cost versions of cash cows of competing services to distract them and/or force change upon them. (Google Docs)
• Even when you have a market leading position, keep investing heavily in complimentary markets to reinforce your position as the default. Become ubiquitous. Become a verb. (mobile operating system)
• When you tap out the potential of your product or service look for ways to make it deeper is select high value verticals. (onebox, universal search, site search)
• When you have enough leverage and a large enough lead, change the market to put yourself at the center of it. (the Omnibox in Google Chrome)

I Missed Many Ideas...

What marketing lessons have you learned from watching Google?

Online Ad Networks in Despair

Some ad networks are late with payments and slashing rates. There have been many reports of internet ad networks dying recently, and most of them deserve to because they add no value...they are all hat no cattle.

Publishing Based Business Models in Decline

Like the death of ad networks, many publishing based business models are in decline.

The yellow page companies that were worth billions are facing bankruptcy.

An encyclopedia that costs $3,000 is covering the field of SEO, but with the speed of information online there is going to be a cap on how accurate and deep a generalist volume can be. The same is true for most web publishing business models.

Most content is a commodity, and it is hard to build a loyal PROFITABLE audience if you are in a generic vertical like news. The New York Times is running on fumes.

Some of the most successful blogs now resemble the media they claimed to replace:

Almost all of the popular blogs today are commercial ventures with teams of writers, aggressive ad-sales operations, bloated sites, and strategies of self-linking. Some are good, some are boring, but to argue that they're part of a "blogosphere" that is distinguishable from the "mainstream media" seems more and more like an act of nostalgia, if not self-delusion.

Nick Denton has sold off 1/3 of his blogging empire and claims that we are in for an ugly online advertising contraction.

Domain name owners, which hold an easy to operate passive revenue stream, have seen ad based earnings drop and have been forced to sell off large chunks of their portfolios, as mentioned by Fabulous.com:

“Historically, the domain services businesses. . . . have generated the majority of their gross profit from intermediating advertising revenue. As the advertising component of the industry has declined, industry profitability plummeted. Many service businesses that rely exclusively on advertising are no longer viable and the industry is ripe for consolidation. Going forward the company sees secondary market domain name sales becoming a much more significant component of the industry . . .”

And those who have a lot of consumer driven media inventory are not faring much better:

P&G's Ted McConnell pointed to the drumbeat of complaints about social networks being unable to monetize their sites. "I have a reaction to that as a consumer advocate and an advertiser," he said. "What in heaven's name made you think you could monetize the real estate in which somebody is breaking up with their girlfriend?"

Are Networks the Right Approach?

The web allows you to connect with people and build communities based around a shared interest. Where is the value in going with a no named ad network to sell inventory when you can change your business model from being a publisher into being a publisher & retailer? Each day the network grows more efficient. During the downturn the best voices will keep building relationships, mindshares, and marketshare - even if it is not that profitable. Once the market returns they will grow faster than those who cut spending.

How to Make Your Marketing More Integrated & Build a Community

Advertise the Advertisement

Youtube allows you to advertise Youtube videos on a CPC basis. Rob Snell created a business card that advertised his conference panel.

Get People to Talk About You

The best advertising is not what you say about yourself, but what others say about you. That is why Graywolf launched Viral Conversations, a new blog oriented ad network around reviewing physical products and real world services, marketed by giving away great content on how to keep up with the latest buzz.

Encourage Syndication

Video interviews work well (particularly when you are not as chubby as I am...I soooo need to diet, and am getting on the eliptical machine as soon as I hit publish on this post ;)

And if you can be the host of a great presentation by a guy like Seth Godin that is even better.

Let Seth talk about the importance of ideas like

• direct communication between the person who uses the thing and makes the thing
• amplifying consumers
• the power of speed
• the long tail
• product ideas spread...not advertising ideas
• its about focus, not size
• be scarce or ubiquitous

And sit back collecting inbound links. :)

Be Original

Give people more data, do original research, quantify that research, write about topics that are not being covered, be quirky, be the first to report on in the news topics from the lens of your industry, bring back the past, or predict the future.

Give it Away

Copyright is losing momentum. Profits are is increasingly associated with social connection.

Rather than accumulating debt to spend on marketing try to create something that is free that you can give away. Sell food? Offer free recipes and a free online cookbook. Sell software? Give away a lite version. Looking to build a platform? Offer a strong API. Sell consulting or information? Offer with papers and/or a blog. As you gain exposure you can give away less and spend more time and effort making your customer relationship deeper and more meaningful.

Change is Constant

As an online entrepreneur you can't be afraid of change.

Social media is the next big thing! No, it's the big thing! It is here, now, and it is big! Let's face it, if you're not aboard the cluetrain to social media marketing city, you're sitting on that station alone!

A pity, then, that social media traffic is so often worthless.

Worthless?

Let's look at the market signals. Why is it that you pay dollars per click on Google Adwords for financial keywords, yet the same keywords on social networks are priced at five cents?

This suggests to me one of two things. Either the social networks are seriously underestimating the value of their own traffic, or most of the people on social networks aren't interested in commercial messages. If they were, then the bid values would closely match those of Google Adwords.

I think the latter is the most likely scenario. Social media traffic isn't priced higher, because it isn't translating into revenue for the advertisers. This isn't happening because the intent of the users when engaged with social media is not conducive to selling stuff.

Of course, social media traffic isn't all bad. We'll look at some ways you can benefit from it. But firstly, let's compare and contrast some aspects of social media marketing and search marketing, in order to help clarify the value proposition.

1. Traffic Is Not An Asset, Traffic Is A Cost

Traffic only becomes an asset when it translates into something else. When it becomes a bookmark, a sign-up, a link, or helps establish a genuine relationship. It must also result in an increase in revenue. If it doesn't, then traffic remains an expense.

What is the value of 10,000 Diggers hitting your site to look at, say, a picture of a monkey riding a bicycle? Zero. The trouble is that a lot of marketers are watching the web scorecard - that spike in the visitor stats that shows the number of visits - and using that as a marketing metric. "Hey, I'm popular!".

Sure, with 10,000 teenagers amused by a picture of a monkey riding a bicycle. But how is that helping boost revenue?

There isn't a lot of meaning to such a relationship. It is low value.

"This is a truth of the Internet: When traffic comes to your site without focused intent, it bounces. 75% of all unfocused visitors leave within three seconds.Any site, anywhere, anytime. 75% bounce rate within three seconds. By unfocused, I mean people who visit via Digg or Stumbleupon or even a typical Google search....."I'm just looking," is no fun for most retailers. Yet they continue to pay high rent for high-traffic locations, and invest time and money in window displays. Very few retailers lament all the traffic that walks by the front door without ever walking in. A long time ago, they realized that the shoppers with focused intent are far more valuable. Smart retailers work hard to get focused people to walk in the door and to keep the riff raff walking on down the sidewalk.".

2. Uncontrolled Message

It is difficult to control the message. Released into the wild of social networks, the message can just as easily result in negative effects as positive ones.

Check out this sad experience of being dugg, from Kim at Cre8Pc:

"Since I logged off last night around midnight, 12 hours later, over 23,000 people have been to this blog. The reason is that someone dugg about the post I wrote, where I shared a resource I found useful. That post was "dugg" and the incoming traffic this blog is receiving is to that specific blog post I wrote....Diggers complained about everything from the site design of the site I wrote about, to how stupid I was to write about it at all.....Which part of this Digg activity am I supposed to be happy about, now that something I wrote has officially been slaughtered there?"

Kim wasn't trying to get on Digg as part of a marketing strategy, but it shows how unpredictable the "benefits" of social media exposure can be.

Perhaps this might explain why Digg has been left at the altar a few times? It suggests to me that it might be difficult to extract real commercial value from such environments. Part of the problem is structural. Digg is "free" and "open" and "anonymous", which leads to a tragedy of the commons.

At the risk of blowing our own horn, part of the reason our SEO community is valuable is because people have to pay for it. People have provided a signal of interest lacking on most broad social networks. There are no questions from a member named MakeEasyMoneyOnlineTodayRightNow asking how to get his adsense earnings up to $1 a day. The price of admission helps protect the community from the tragedy of the commons.

3. Branding Is Often An Excuse For Failed Marketing Campaigns

"It's a brand spend!". Marketers say that a lot.

What they often mean is "we can find no no measurable return".

Return on brand spend is very difficult to measure, and even more difficult to isolate in a channel such as online social media marketing. Did visitors remember our brand? Did it affect their future buying decisions? Was the brand association positive or negative?

Who knows?

If you're thinking of engaging a social media marketer, and they use brand building as a metric, ask them to explain how they will demonstrate an increased, favorable level of brand awareness. If they mention traffic numbers, ask them how that squares with my first point "Traffic Is Not An Asset, It Is A Cost".

To my mind, any commercial endeavor must ultimately come back to revenue.

4. Level Of Interaction

What are people doing on social networks?

On the likes of Facebook, they are engaged in social activities. They are catching up with their friends. They are playing games. Marketing messages in this context are about as welcome as an Amway salesperson at a bachelor party.

Consider the context of the message. Search marketing works well because the searcher has already signaled their intent, and that intent may well be commercial. It's like walking into a shop, and asking to buy a watch. The relationship and interaction is direct and obvious. The context of social media is more like a cocktail party. People are there to socialize, not enter into commercial interactions. They may do so, but the relationship is fuzzy and indirect.

To overcome this obstacle, look for social networks, or network groups, where the users demonstrate clear, commercial intent. Alternatively, have a clear idea of how you're going to progress "fuzzy indirect" visitors to desired action.

5. Time

Social media marketing is time consuming.

Building your social networks. Responding to "friends". Is there are measurable return for the time spent? What is the opportunity cost of that time?

For example, compare the time you need to get a commercial message on the front page of Digg, with getting a commercial message on the front page of Google. With Adwords, I can do it in seconds.

With Digg, I'd be unlikely to get a marketing message to the top, unless I'd previously developed relationships with all the right people and/or gamed the system, which, in itself, takes a lot of time. Even then, the marketing message, unless heavily disguised, will likely be despised by a community rabidly opposed to any message with an obvious commercial imperative.

Is this time well spent on either channel? Once again, a cost/benefit analysis, where the benefits are clear and measurable, will provide the answer.

6. Rampant Stupidity & Useless Distractions

I guess no-one ever went broke underestimating human stupidity, but one really has to question the marketing value of these types of approaches:

"The Coca-Cola Company will feature its Sprite brand on a new Facebook Page and will invite users to add an application to their account called "Sprite Sips." People will be able to create, configure and interact with an animated Sprite Sips character. For consumers in the United States, the experience can be enhanced by entering a PIN code found under the cap of every 20 oz. bottle of Sprite to unlock special features and accessories. The Sprite Sips character provides a means for interacting with friends on Facebook"

Facebook, which distinguished itself by being the anti-MySpace, is now determined to out-MySpace MySpace. It's a nifty system: First you get your users to entrust their personal data to you, and then you not only sell that data to advertisers but you get the users to be the vector for the ads. And what do the users get in return? An animated Sprite Sips character to interact with.

Are people going to then talk about Sprite in a way that would increase the sales of Sprite? Really?

I can barely imagine this would work for a teen audience. Such an approach has no chance with an adult audience. Keep in mind that most people who are heavily active on generalist social network sites are likely to fit in the 15-25 year old range, although there is evidence to suggest this age range might be changing. Look at it this way - how many stories about hip-replacements ever make it top the top of Reddit?

There are a lot of messages that just aren't going to work on social media. Wrong time, wrong place.

"Media buyers — the agency people who book campaigns — report that the college social network is a truly terrible target. They're mainly students, with low disposable income, of course; but, beyond that, the users appear to be too busy leaving messages for each other to show much interest in advertising. Facebook's members appear indifferent even to movie advertising aimed at their demographic. Clickthrough rates, the percentage of time users click on an ad, average 0.04% — just 400 clicks in every 1m views — according to one report seen by Valleywag."

7. Difficult To Scale

It is easy to scale up a television campaign. Buy more airtime. It is easy to scale up an Adwords campaign. Increase the number of keyword terms and/or bids. How do you scale up a social media campaign? You can't re-create viral. Viral is hit and miss. All word of mouth is hit and miss. How many people can you cost-effectively follow on Twitter?

Social media tends to pay dividends in the long-term. Social media, generally speaking, is hard to influence, but by understanding your field well and creating relationships in your niche, you can learn to create the types of content that influencers will pick up on. Like the mavens in The Tipping Point, they will spread your message for you.

Forging such meaningful relationships won't happen overnight.

Where Social Media Pays Off

Ok, I admit it. This post has been a bit of a rant :)

It's not all bad news.

Whilst not a replacement for a marketing strategy, social media can be a viable component of a wider marketing strategy. It can be used to generate buzz. It can be used to attract links. One well placed article can achieve both these ends. If that buzz, and those links, can then be translated into a valuable relationship, and perhaps better Google rankings for commercial keywords, then the social media approach may well pay dividends.

In order to do this, social media must be back-ended with content geared towards establishing a valuable relationship, rather than one-off visits.

Marketing exists for one purpose: to sell stuff. If it doesn't do that, then it isn't marketing.

The key to evaluating social media marketing, like with with all media spends, lies in tracking and cost/benefit analysis. If traffic provides you with a measurable return on investment, then the marketing spend is justified. The only traffic worth anything is that which ultimately results in revenue producing interaction.

The problem I find with social media traffic is that so little of it ever does.

Your mileage may vary.

One of the reasons SEO is such a killer marketing strategy is that a small business can compete with, and often outmaneuver, a big business.

Compare the costs of a SEO campaign vs any other marketing channel. Television? Radio? Print? How much would it cost to get worldwide exposure using any of those channels?

We're all sold on search marketing. However, there are other advantages that the small business enjoys. In this post, we'll look at a few of those advantages, are see if there are any natural synergies with search.

First, let's consider boats.

Given a choice between being in a speed boat or being in a supertanker, which would you choose? In a storm, I'd probably rather be on the supertanker, as it can weather the waves better. However, the supertanker has a number of disadvantages. It can take a long time to maneuver, it requires a big crew to sail it, it is sluggish, it is expensive and monolithic.

The speed boat, on the other hand, can zig and zag, change direction at will, only requires one person to operate, uses a lot less fuel, and it's fast.

The small business is like the speed boat. The small business can do things the big business cannot. Speed and agility are the key weapons of the small business.

So that's the shipping metaphor beaten to death. Now let's look at the specific advantages of the small business, and marry these to search marketing strategies.

1. Exploit The Niche

A small business can focus on a very narrow area and make a profit. Big business often cannot do this, as a big business requires larger markets in order to provide enough return to cover overheads. Focus on narrow, well-defined areas in which you perform well. Ignore everything else.

Once you've identified and established your niche, it makes your SEO task a lot easier. Do you really need to rank for those competitive terms? Possibly not. You only need rank for those terms that relate directly to your narrow niche.

But what if your niche is competitive? Try narrowing your niche further, or change the niche.

For example, real estate is a competitive area. Real estate is Los Angeles is a competitive area. But the level of competition in small, well defined geographical areas is much diminished. Sure, there is less traffic, but if you're a small business, with a well-defined geographical market, how much traffic do you really need to turn a buck?

2. Strategic Partnerships

A small business can easily align with other business. Big business can be slow to do this, often due to legal issues and long sign-off procedures.

If a strategic partnership makes sense for your business, also consider the benefits in terms of SEO. If you align with an established company, ask for a write-up and a link. Announce the partnership by issuing a press release. Make it easy for your partner to talk about you, and they'll do your link marketing for you. Outsourcing can achieve much the same thing. If appropriate, have those to whom you outsource link back to you.

3. Reduce Overheads

A small business, especially an internet small business, can run on next to nothing. You need a computer. You need an internet connection. You need some time and effort.

In a down market economy, big companies spend a lot of time and effort slashing costs. The small business usually runs lean anyway, so whilst the big business is pre-occupied with restructuring and layoffs, you can focus on developing new territory.

One of the first cuts companies make in a down market is to cut marketing spend. This is often a mistake, as I outline in Eight Reasons Why Now May Be The Right Time To Invest In Your Site. What you're not spending on maintaining overhead, you can dedicate to the strategies that earn you money. There is some indication that we can expect the price of PPC to come down over the next year as some big companies, who often run PPC strategies aimed more at building brand awareness than return per click, reduce their marketing spend.

4. Bootstrap

Bootstrapping means a self-generating or self-sustaining process.

In terms of business, that means that growth is funded from - and remains in line with - revenue. Possibly one of the most successful recent examples of bootstrapping is the Wikipedia Foundation.

Take a look at Wikipedia's recent financial report.

Wikipedia have few employees. Many of those employees were brought in relatively recently, and only as the project scaled up. The Wikipedia Foundation reports $3.5 million in costs, and has a turnover of over $7 million.

A bootstrapping approach to SEO/SEM might be to focus on revenue. Pay only for those clicks that make you money, and quickly cut the losers. Once you know which keywords make you money, THEN start your SEO campaign, focusing only on these terms. Repeat and scale up.

5. Direct & Personal

A small business can offer expertise, direct to the customer. The customer can talk directly to the person who makes all the decisions. Try doing this with a big business. A customer might get no further than a lowly paid graduate. There can be a lot of value to the client in dealing with a small operation.

Get personal. People are tired of anonymous, faceless companies. The small business can easily make a service more personal. Small means the founder deals with a far greater percentage of the customer interactions. Small means the founder is close to the decisions that matter and can make them quickly. When a visitor arrives via a search, impress upon the visitor they are dealing with a small company. Some small companies like to give the impression they are much bigger than they really are, but this is often a mistake. The customer is going to find out soon enough, so the initial impression will smack of dishonesty.

In your title tag and ad copy, emphasis the advantages of being small. Personal service, direct accountability, and availability. The people who want to deal with a big business will have gone elsewhere, anyway.

Say it once. Say it loud! I'm small, and I'm proud!

Except if you're a guy on a date...

6. Adaptation

A small business, like the speedboat, can change direction in an instant. You could be doing something totally different tomorrow than you do today. A big business cannot do this.

Always be on the lookout for new markets, and the tide of change in existing markets. Make trend-spotting a regular activity. Use keyword tools and other research methods to give you insights into new and developing markets.

7. Make Staying Small A Strategy

Decide which clients make you the most money, and cut the rest. In other words, deliberately stay small.

I've heard of a number of companies doing this, and here's one example:

"Incredible Foods quickly landed one of the biggest accounts of all: Starbucks. "They were opening new stores in northeast Ohio and Pennsylvania in 1998 and wanted me to distribute a single product, a crumb cake," says Christy.But as Starbucks locations multiplied, Christy's workload ballooned. Revenues reached $3.4 million in 2005, but soaring overhead wiped out Christy's profits.

That year, Christy decided to cut the cord. The (Starbucks) account generated 48% of Incredible Foods' annual revenues, but Christy believed that he could run a stronger company without Starbucks. So he shrank the staff from 13 to six, eliminated one of his two offices, and focused his marketing attention on local customers who closed deals with a handshake, generally without resorting to squadrons of lawyers and accountants.It paid off. Last year Incredible Foods posted an 11% increase in profits on revenues of $2.2 million, and Christy expects a 22% revenue increase this year".

Staying small can actually be more profitable. And a lot more fun. Check out Seth Godin's book "Small Is The New Big".

8. Design & Strategic Flexibility

This is a big one.

Anyone who has ever worked on an established corporate site will know the difficulty involved in reorienting the site towards SEO. There are meetings. There are conflicts with various stakeholders. Designers will be reluctant to change their ways. Copywriters will be reluctant to change their ways. Management may fail to grasp the benefits of SEO. In such situations, it is easy to lose focus, and compromise the SEO strategy.

It happens all the time.

Then, there is the small business. If there are few - or only one - of you, then it is much easier for you to incorporate good SEO. Not only can you compete with the big business, you can thrash them.

Use your speedboat to maximum strategic advantage.