Five Companies That Could Destroy (or Save) Comparison Shopping Engines

A few years ago, comparison shopping engines (CSEs) like Shopping.com, Shopzilla, Nextag and PriceGrabber were hot commodities. Many of them had been acquired for upwards of $500 million, they had strong profits, and a growing customer base. This despite the fact that they had very poor user interfaces, questionable data accuracy, and complicated back-end systems for retailers.

Today, the accuracy and functionality of the CSEs aren’t much better than they were in the past, but the competition lining up to grab market share is much more fierce. Over the next few years, consumers will have more choice when it comes to online product comparison than they have ever had before. My bet is that when the dust settles, the CSE landscape will be much different than it is today.

In my estimation, there are five companies that could have a major impact in the outcome of this epic battle. In alphabetical order, these are Google, Microsoft, SingleFeed, TheFind, and Ztail. This article presents a brief overview of how each of these companies could fundamentally change comparison shopping as we now know it.

Google: Google has not been shy about creating products that directly compete with eBay. This includes Google Checkout (PayPal), Google Talk (to some degree, Skype) and Google Product Search (Shopping.com). And while none of these products has yet to make dramatic inroads against eBay’s established players, Google’s aggressive tactics suggest that they are very determined to eventually grab walletshare away from eBay.

But even if Google doesn’t take out Shopping.com via Google Base, they have a potentially much more effective Plan B that they could use to seriously impair all CSEs - banning them from advertising on AdWords. Though it would cost Google money to prevent CSE advertising, it’s clear that people over at Google have been thinking of this scenario, as evidenced by a recent declaration by Google that comparison shopping engines “merited low landing page quality scores.” Getting effectively banned from AdWords is often a death knell for online companies, and while this alone wouldn’t kill the CSEs, it would certainly be a fatal blow.

Microsoft: MSN recently announced their intent to ‘pay searchers’ who buy products via MSN Live Search. This completes their integration of Jellyfish, a CSE that made it’s name by sharing their advertising revenue from merchants with the consumer. In many cases, consumers can save up to 15% on their purchases simply by going through MSN. In essence, this opens up thousands of affiliate programs to consumers.

This is really a very smart move by Microsoft for two reasons: first, it’s a great way to steal users away from other CSEs - after all, if the functionality and product selection is about the same on all CSEs, wouldn’t you rather use the CSE that gives you 5-10% back? Secondly, a cash-back model incentives Microsoft to display search results based on relevancy to the user - relevancy as defined by the percentage of people who actually buy something. The current monetization model on most CSEs is a straight CPC bidding system with little weight given to relevancy.

Since the CSEs actually make more money by providing a poor user experience (because a consumer will click on multiple paid clicks before selecting a product), the user experience is understandably frustrating. Microsoft’s new model incentivizes them to actually help the consumer find what they want, since it is a performance-based model. So as a CSE with consumer and merchant interests properly aligned, you’d expect their site to gradually become much more useful than traditional CSEs. Combine that with paying users and I think Microsoft has found a winning strategy to gain a lot of market share.

TheFind.com. TheFind differentiates itself from other CSEs in one significant way - it relies on an algorithm to find products, rather than structured data. What’s the difference you ask? Well, an algorithm (like Google’s search algorithm) is an automated program that scours the Web and organizes results based on relevancy factors. Structured data, on the other hand, requires end-users (in this case, merchants) to upload product information in a format that fits the CSE’s specific data organization.

While the idea of having merchants control their product information sounds good at first glance, it’s actually fraught with problems, not the least of which is the fact that most merchants don’t understand how to properly upload their information, don’t update pricing frequently, and as result often fill the CSEs with out-of-stock, discontinued, or wrongly classified results. So over time, you’d expect TheFind to provide more data, more accurate data, and a better user experience than a traditional CSE. Time will tell whether this actually happens, but if it does, it will not bode well for CSEs.

SingleFeed.com. A potential savior of the structured data model is SingleFeed and other data optimization companies. SingleFeed is essentially a middleman that makes it easy for merchants to upload and update their data on the CSEs. If SingleFeed is successful, you can expect many more merchants to participate on the CSEs, and you can expect these listings to be much more accurate and up-to-date. SingleFeed could be the ‘missing link’ that saves the structured data approach.

Ztail.com. Ztail is the first company I’ve seen to truly fuse Web 2.0 and comparison shopping. The essence of the business is that you can discover the worth of any product online at Ztail by looking at eBay auction prices, CSE data from Shopping.com, and user-inputed estimates. For example, if you have an 8GB iPhone, you can combine the prices of new iPhones from Shopping.com, used ones from eBay, and perhaps even iPhones that users saw for sale on Craigslist to triangulate around the true worth of the phone.

This combination of new, used, and user-generated pricing is actually a much more accurate and comprehensive way to get pricing information than going to a basic CSE. If the site takes off, it could very well become the Yelp.com of product pricing, making CSEs only helpful insofar as they exist as part of the Ztail ecosystem.

Conclusion: The traditional CSE model is dying. With little innovation in the last few years, the rise of better algorithms, Web 2.0, and new comparison shopping options, CSEs today are faced with a Darwinian reality - evolve or die. The good news for the CSEs is that most of them are now owned by giant multinational corporations with huge wallets and resources. The bad news is that giant multinational corporations aren’t particularly good at innovating. To save their investments, however, they may need to break that bad tradition pretty soon.

Classmates.com: We're Like FaceBook, but With Less Features and We Charge You

Last year I wrote about the different paths taken by FaceBook and Classmates.com and how Classmates' decision to charge consumers up front may have ended up costing them the market that FaceBook now dominates.

Today I received an email from Classmates with the subject line "Classmates Has Big News, David." I assumed that this would be the announcement that Classmates had finally abandoned their subscription fee and adopted the FaceBook 'monetize with advertising' model. Alas, old habits die hard. Here's the email's contents:


That's right - it's a FaceBook-style news feed and friend finder, but you still have to pay for it. And of course the number of people you know on Classmates at this point is probably about 1/10th the number you know on FaceBook. Less features and less friends - and you get to pay for it. While I often like the idea that "less is more", it doesn't apply in this case.

Lead Gen Mixer Tickets On Sale Now (Only 150 Available!)

For those of you who will be in SF on June 12th, I encourage you to buy your tickets now for the lead gen mixer. Tickets are $15 each and include beer, wine, food and fun. We're selling 15o total tickets so get them while you can!

Lead Gen Mixer - June 12th in San Francisco

As many of you know, the lead generation industry is filled with introverted, anti-social nerds who prefer quiet nights at home watching Dr. Who re-runs over interacting with others. With that in mind, Jay Weintraub (founder of the amazing LeadsCon lead generation conference) and yours truly (founder of the LinkedIn Online Lead Generation group) are proud to announce the first of what we hope will be many lead gen mixers!

The event will take place at the Thirsty Bear brew-pub from 6-8PM on Thursday, June 12th. Due to space constraints, we will likely have to limit attendance to about 150 people. In a few days, we'll be posting a link to where you can purchase a ticket to the event. There will be a very small charge to attend (mostly so that we only get RSVPs from people who are actually intent on attending!), but we'll also be getting some sponsors to pitch in some dollars (if your company wants to sponsor, contact Jay at jay (at) leadscon.com), which means that the vast majority of your unlimited beer, wine, and appetizers will be covered by someone else.

We'll do our best to give preference to attendees of LeadsCon and members of the Online Lead Gen group, but I suspect that most tickets will be grabbed by those who act fast.

I look forward to meeting a lot of you there!

Keeping Your Search Engine Marketing Consulting Business Successful - 7 Tips

As with any business, customer retention is far more valuable than customer acquisition. Companies that succeed in the long run are the ones that invest heavily in keeping their customers satisfied, rather than only spending money to acquire new ones. One of my absolute favorite marketing books is The Loyalty Effect by Frederick Reichheld, which explains in painful detail why companies that retain their customers far outperform companies that don’t ( trust me, it is the best $11.86 you will spend on a marketing book this year).

I wrote an homage to Reichheld’s book last year with a particular focus on eTailers, in which I noted: “If you can get the customer to return five times and spend $100 each time, that’s $500 more you could spend profitably acquiring this customer. Moreover, it turns out that repeat customers tend to spend more than new customers, require less customer service, and are more likely to recommend your business to others.”

You would think that search engine marketing consultants – being marketers – would understand the importance of customer retention better than the average business man. Sadly, this often appears not to be the case. I’ve only been doing SEM consulting for about four months now, but I’ve already seen plenty of examples of SEM consultants doing a great job of customer acquisition and then doing next to nothing on customer retention.

For my personal SEM consulting business, bad customer retention is both a blessing and a curse. It is a blessing because it enables me to a) win new business and b) come in and “wow” a client with my consulting (and I’m not bragging about my consulting skills here – many clients are wowed by the most basic services after a bad consulting experience). But it’s an overall curse for our industry because it leaves a bad taste in our customers’ mouths. The weakest link in the chain brings everyone else down. To use an analogy, there are good car dealers and there are bad car dealers, and most Americans are suspicious of all car dealers because of their run-ins with the bad guys, which ends up hurting the businesses of the guys trying to be honest with their customers.

So I write this article with the knowledge that it could result in a short-term loss of business to my consulting firm, but a long term benefit to SEM consulting overall. And in the spirit of customer retention, that’s good for everyone.

Here are my seven tips for keeping your SEM consulting customers happy:

1. Don’t take the work if it really isn’t your area of expertise. I recently had a potential client call me who was interested in building out an end-to-end lead generation offering. While I’ve been in the lead gen industry for several years, I certainly am not an expert at building out lead generation business. So I told them that I couldn’t take the work and referred them to a friend who I thought could really do an awesome job for them.

While it’s true that I turned down an opportunity to make money immediately with this client (short-term financial win), I believe that in the long-term this will turn out to be a win for my business. Why? Well, first off, the potential client now sees me as a straight-shooter and we’ve established a relationship based on trust. Second, the client knows that when they are ready to invest in SEM lead gen, that I am their go-to guy. And third, the friend I referred the business to will want to reciprocate the favor in the future and send some business my way. In other words, I rejected one client but will probably end up getting several clients out of the deal in the long-run.

2. Don’t accept work too big or too small for your practice. It’s hard to turn down clients, especially when you are trying to keep the lights on at home! But accepting the wrong clients may pay the bills this month but hurt your long-term ability to grow your business.

As an SEM consultant, you need to understand your “client sweet spot.” For some businesses like ReachLocal or Yodle, a client that is paying $300 a month is a great client. But if you are a one-man shop, you may find that a $300 client actually costs you more money than you are getting paid (think about it this way, if you have to spend ten hours a month on a $300 client, are you hitting your business’ financial objectives?).

Inevitably, if you accept clients that are ‘too small’ for your business, you will feel pressure to spend less time on their accounts and more time on the accounts that are paying your bills. And this will lead to bad customer service and bad performance for these clients and eventually the cancellation of their accounts. The adage ‘a satisfied customer will tell one person about your business, a dissatisfied customer will tell ten’ applies here.

By the same token, while it is tempting to try to close a client that spends $500,000 a month on the search engines, you need to be really confident that you have the time, tools, and resources to satisfy this client before you accept the contract. Big clients generally require more face-time, have more bureaucracy, may have their own reporting systems, and may expect very specific deliverables from you. If you don’t have the staff to support this, you may end up signing a big contract that only lasts a few months before the client bolts.

3. Be brutally honest. An easy way to close a client is to overpromise and flatter. People love compliments, and if you come into a meeting and talk about how much you love their Web site, product, and marketing strategy and promise huge ROI from SEM – even though you don’t believe any of this to be true – you will no doubt win the battle (the contract) and lose the war (the long-term client).

If a potential client’s Web site is horrible, or if he sells a product that just won’t work on search, or if his back-end economics pale in comparison to the competition (and thus you won’t be able to bid effectively on the search engines), honesty is the best course of action. Search engine marketing cannot exist in a vacuum, nor do search marketing consultants have magical powers to turn straw into gold.

Moreover, telling potential clients the truth about their overall potential for success may end up being a good business opportunity for your consulting firm. I frequently pitch clients on a combination of ongoing SEM consulting and a one-time usability tune-up. Again, this is a win-win situation – I get more of the client’s business by charging for the usability assessment, the client gets a much better converting Web site out of the deal, and we both end up satisfied with the increased success of the search engine marketing campaign.

4. Establish clear business goals up front. Most people are optimistic by nature, and this is particularly applicable to Internet start-ups. After all, if you don’t believe you can change the world, why bother taking the gamble to start your own revolutionary business? As much as I love hanging out with people try to subvert the dominant paradigm, it’s also important as a consultant to try to bring these folks at least a little closer to earth and establish realistic and clearly understood goals at the beginning of the relationship.

This can be as simple as setting a “cost per conversion” goal, a margin objective, or a 30-60-90 day plan. However you want to do it, establishing benchmarks and goals upfront avoids any misunderstandings down the road. The worst case scenario is one in which you are very excited about the positive momentum you are driving for your client and the client thinks you are failing. With clear understanding upfront, that should never happen.

5. Be responsive. As you grow your client base, it becomes harder and harder to provide personal attention to every client. Your clients, however, have only one business to run and (deservedly so) believe that their business is the most important business on earth, and expect you to feel the same. So if a client emails or calls you, you need to find a way to get back to them ASAP. My rule of thumb is that a non-urgent email/call from a client must be answered on the same business day and urgent calls should be returned within two hours.

Even if you can’t get the client an answer immediately, you should still respond promptly acknowledging receipt of the communication and giving the client a timeline as to when you will respond in full.

6. Check on the basics at least once a week. Here’s two amazing but true anecdotes I heard from clients. Client #1’s business was running fine until one day his phone stopped ringing. This went on for a week and he had no idea why he wasn’t getting new client calls. Finally, he logged into his AdWords account and discovered that his credit card had been rejected. He fixed the credit card problem and promptly fired his former consultant, who clearly wasn’t paying attention to his account.

Client #2 was working with a pretty sizable SEM agency and paying the agency about $4500 a month for their services. When the client logged into AdWords and checked the “My Change History” tab, she noticed that the agency had spend a total of less than an hour and a half making changes to her account – over a three month period. In fact, for the entire month of March, the agency hadn’t made a single change. On a prorated basis, she was paying $10,000 an hour for these SEM services.

To do a good SEM consulting job, you don’t have to run sophisticated regressions every day or figure out some advanced day-parting strategy. But you do need to pay attention to your clients’ accounts on a regular basis – at least weekly and preferably more frequently. Not making any adjustments for an entire month – and collecting $4500 – or letting an account go quiet for an entire week is completely unacceptable.

7. Act like it’s your business. Everything I’ve mentioned above can be pretty much summed up by this point. If you don’t care about your clients’ business because it is too small, because you have too many clients, because you think it is going to fail no matter what, or for any other reason, this will show in the quality of the work you perform for your client. I’m not saying that you have to be excited about your clients’ products, but you do need to be pumped about doing everything you can to grow your clients’ businesses.

Sometimes this means doing things that will negatively impact your consulting business. For example, if you are charging clients on a percentage of spend basis, whenever you pause or bid-reduce high volume keywords you are inevitably reducing your monthly bill. Ultimately, however, whenever you make decisions that benefit your clients, there’s a good chance it will end up benefiting your business in the long run. Again, if you are serious about your consulting business, you shouldn’t be thinking about this month’s revenue; you should be thinking about where you’ll be three years from now.

Technology Has Changed the Road Trip Forever

In a few weeks I'll be taking my three month old son on an American rite of passage - the road trip. This one is pretty short - only four days - and does not include 20 hours a day of driving to make it cross country (total distance is about 200 miles - from Phoenix to the Grand Canyon). But when I was young, my family had many a long road trip, to places like Texas, Montreal, Colorado and even Niagara Falls.

Back then, road trips required a lot of creativity to pass the time. We of course played the "license plate game", tried to get truckers to honk at us, listened to my Mom read us books, and just stared at the passing scenery. I suppose that part of the fun was getting there, but sometimes it seemed to be a never-ending journey.

These days, road trips are a lot different, mostly thanks to technology. First off, bored children now have access to dozens of electronic gadgets to pass the time; in-car DVDs, portable gaming systems, laptops, and mp3 players are just a few examples. Bored grown-ups also have plenty of options, like cell phones, books on CD, and satellite radio. Gone are the days where being in "the middle of nowhere" means no access to other humans and no entertainment options.

And getting lost is no longer a problem now that GPS is almost standard in most new cars. Even without GPS, if your car breaks down and you have On-Star, you can call someone who will pinpoint your identity and send help immediately.

In short, road trips are just easier for everyone these days. Maybe that takes some of the adventure out of the trip, but I suspect that I'll be thankful that my family will have plenty of options for preoccupation once I embark on a real long-haul trip.

I can only assume that technology will continue to evolve the road-trip over the next decade. Surely GPS systems will begin to recommend attractions and offer coupons, based on location and perhaps even a degree of personalization. And as more and more travelers get WiFi in their cars, I can imagine multi-player games that pit family versus family who happened to be travelling within the same stretch of road.

Off-Topic: Help Stop a Child Abduction

This is totally not SEM-related, but it is worth writing about - if we can make even a small impact on this situation, it would be worth it. I'm hoping that after reading this you'll also want to help and spread the word.

A few years ago, my friend Craig introduced me to a work colleague of his - Paul Wong. I met Paul and his wife Akemi several times - they were both really friendly, good people and I enjoyed spending time with them. Well, Craig left the law firm where he was working and Paul did as well, and I got married, had a kid, moved to Pacifica, etc, etc - long story short, I hadn't heard much about Paul and Akemi for a few years.

Today, however, Craig sent me an email with some really sad news - Akemi died of cancer. And to make matters worse, she had just given birth to a daughter, Kaya. Paul had to raise Kaya on his own. Before Akemi died, she asked Paul to move to Japan with Kaya, so that Kaya could be closer to her maternal relatives and learn about Japanese culture. Paul agreed, quit his job, and prepared to move to Japan.

Prior to moving, he sent Kaya to live with her maternal grandparents in Kyoto. When he finally arrived in Japan, his parents-in-law suddenly decided that they didn't want to give Kaya back to him. As he described this on another blog:

"Once I moved to Tokyo last year, the grandparents did everything possible to keep Kaya away from me. When I said I'm taking her back, they filed a lawsuit against me filled with lies and claimed I had sexually assaulted my daughter. There are no facts and the evidence is completely flimsy."

The blog post continues: "a Japanese court investigator found that the girl was washed and inspected every day after a swimming lesson at her nursery school and her teachers never noticed signs of abuse" and that:

Despite the lack of any substantiating evidence and objective factual evidence establishing the allegations as false, the Family Court in Tokyo recently permanently stripped Paul of his parental rights and awarded his daughter to her maternal grandparents on the the basis that, even if there is no evidence, "normal" people would not make up such a story, therefore "something" must have happened. The Court ignored all evidence establishing the allegations as false, including the findings of its own court investigator; never once mentioning them in its decision.

Paul recently wrote an email to Craig, which Craig forwarded on to me. In it he writes: "through Kaya's case, I have learned that abductions of children in Japan is a rampant problem. No child has every been returned to a foreign parents. Had I known this before, I would have never allowed Kaya to leave my side. The victim in all of this is poor little Kaya. I haven't seen or talked to her for over 10 months now."

I'll be the first to admit that I don't know Paul that well, but I'd like to think that I know him well enough to know that he's stuck in a very unjust situation through no fault of his own. I've already written a friend of mine at Harry Reid's office, and I plan to write Nancy Pelosi's office as well. As Paul writes:

"The only way Japan will change is to shame them with international publicity. This country hates that. They will outlast everyone by dragging things on and on but the one thing they will react to right away is public humiliation. Even the Japanese here say that's the only way if I ever hope to see my daughter again."

So if you have a spare minute today, please help Paul out - write your senator, write a blog, do what you can. As a parent, I can't imagine how terrible this must be for him and I'd feel horrible if I didn't take a few minutes out of my day to try to help.

Why Can't We Apply the Google Algorithm to Every Day Life?

Yesterday I went to the pharmacy to pick up a prescription. I had called the prescription in the day before and all I needed to do was tell the pharmacist my name, pay my co-pay, and leave. In front of me was a man who wasn't quite as prepared for his pharmacy visit as I was. He first asked to pick up a prescription, only to be told that he had shown up too late and the prescription had been canceled. He asked for a refill, and then was told that he would have to call his doctor first. He then asked if he could just pay for the prescription and had to wait to get the full price. Once he heard the full price, he had to ponder whether he really wanted to pay $125. Finally he decided to just come back later. The whole process took about 20 minutes.

One of my biggest pet peeves is sitting in lines. Did you know that the average American will spend five full years of his life waiting in lines? That's one year less than what we spend eating, and 10 times longer than we spend waiting at stoplights! And amazingly, a lot of this waiting is time spent waiting to buy something - to give our money away! As Paco Underhill recounts in his classic book on shopping psychology - Why We Buy - retailers spend millions of dollars a year trying to figure out the exact right placement of products in the store, how to create promotions that attract people to shop, and even what music will drive the most purchases, and yet after all this effort, they leave consumers to wait in long lines at the end of the shopping experience. Indeed, I suspect I am not the only American consumer who has spent a lot of time shopping in a store, chosen some items and then seen the long checkout line and dropped my potential purchases on the spot and headed to the exit.

Waiting in lines is just one of many inefficiencies we have to deal with in everyday life. There's the waiting on-hold when you call customer service (or worse, having to spend five minutes trying to interact with a voice-recognition program and then being transferred to an agent who doesn't have any of the information you just inputted); the oblivious driver going 45 in the left lane of a 65 MPH highway; the disorganization that greets you when boarding an airplane, since the frequent flyers all get on first, sit at the front of the plane, and then crowd the aisles, preventing anyone from sitting down; the fast food restaurant with 15 people working and no one but you in the establishment, but no employees taking any initiative to take your order (yes, I am talking about you - employees of the KFC located on El Camino in South San Francisco!).

The same annoyances once occurred in search engine marketing. In the old days, he who bid the most showed up in first position - even if his product was not relevant to consumers and his ad text gave consumers no reason to click through. Like everyone else, I gamed this system. I used to buy ads for FindLaw that lacked any semblance of a call to action like: "FindLaw: The #1 Online Legal Resource." I figured it was free branding and I definitely drove a lot of impressions on the cheap. But Google changed all that with it's 'yield management' algorithm. The technical (er, Wikipedia) definition of yield management is: "the process of understanding, anticipating and reacting to consumer behaviour in order to maximize revenue or profits from a fixed, perishable resource." In other words, by combining maximum CPC with click-through-rate (CTR) and eventually Quality Score (a somewhat amorphous calculation of relevancy), Google changed the bidding process from 'he who bids the most wins' to 'he who makes the most money for Google wins' (a CPM model that maximizes revenue per 1000 impressions). Add in quality score and what Google is really saying is that the ad with the highest monetization for Google that also meets Google's minimum standards for consumer relevancy wins.

The current model applied to most of our waking life is not one of yield management. Waiting in line at the pharmacy, or on-hold on the phone, or behind a slow person in the left lane - these are all examples of a "first come, first serve" model. There is no consideration of the value each consumer places on their time, nor is there any thought put into the amount of time required to meet each consumers' needs. If you happen to get to the airline counter a split second too late, you may need to wait for 30 minutes behind the confused tourists who want to talk to the manager about why their tickets aren't refundable.

So while Google tries in vain to apply yield management to TV, radio, and print advertising, I wish someone would try to take Google's success in AdWords and apply it to my everyday life. Here's an example of my modest proposal for everyday yield management: When you get to the airport to check-in, you are given an estimated wait time and estimated transaction time - for example, your wait time is 25 minutes and the average transaction time is 5 minutes. If you accept these two variables, you pay nothing for this transaction. If, however, you want to shorten your wait time, you can bid money for this service - you bid the maximum dollar amount you are willing to pay to shorten the wait time; the airline then uses a bid auction to rank order bidders. So if I bid $20 to shorten my time in line, and you bid $15, I pay $15.01 to move in front of you.

But wait - there's more! The next twist to this model is that you also have to bid on the length of your transaction. If you need to book a complex four city flight with long stop-overs and use frequent flyer miles for part of the trip, you need to increase the estimated length of your transaction. So instead of a five minute transaction, you need to bid for a 30 minute transaction. If you under-estimate your transaction by more than 10%, you have to pay overage charges by the minute - this is an incentive to prevent people from gaming the system.

Now you factor in your max bid and your estimated time and you derive a "cost per transaction minute" bid. In other words, if I bid $20 for a 30 minute transaction and you bid $15 for a 5 minute transaction, my cost per transaction is $.66 a minute and your cost per transaction is $3 a minute. Because the airline will make more from serving you first (and because you have placed a higher value on your time), you now win the auction.

The final element of this system designates a "quality score" for each counter agent. Counter agents are measured by the amount of time over or under the estimated transaction times they complete transactions. So if you bid 30 minutes but happen to end up with a customer service agent who is 75% slower than the average agent, you are 'comped' an extra 25% of time. At the end of the month, agents receive bonuses and promotions based on their ranking versus the average time.

The result of this system is that both the airline and the customer are incentivized to serve the most needy customers first, and to serve them in an efficient manner. Customers who are willing to wait a little longer or need a little more help are pushed to the back of the line, while customers in a hurry or who simply can't stand lines pay a little extra to get through more quickly.

By the way, I recognize that such a system would be a regressive tax which inordinately penalizes poorer people more than richer ones, and I suppose if you really wanted to get sophisticated, you could find a way to factor in income to the equation, but for the time being, this is just an example, so give me a break!

My point, though, is that Google has taught me that there has got to be a better way to create efficiency than the 'first come first serve' world we currently live in. Happy customers, happy retailers, better customer service - let's Googlize the world now!

Choosing the Right Search Engines - Part One of a Seven Part Series

Several months ago I wrote an overview of the seven most important aspects of SEM to master. At the time, I promised I would quickly follow up with details on each of these habits. Well, the definition of “quickly” is in the eyes of the writer, so here I am 60 days later ready to expand upon each topic area!

The habit I’ll discuss today is “Choosing the Right Search Engines.” A lot of people erroneously believe that the answer to the ‘right’ search engines is either “just Google” or “just Google, Yahoo, and MSN.” Both of these are generalizations that shouldn’t be followed blindly.
As I see it, there are four considerations that factor into your choice of search engines - quantity, quality, ROI, and audience. Let’s look at each of these individually:

Quantity: For most search marketers, there’s no such thing as “too much traffic” (well, assuming this is quality traffic, see next point). Because SEM is such an ROI-driven field, once you discover keywords that work for your campaign, you want to grab as many clicks from these keywords as you can. Thus, identifying the search engines that can drive the most quantity for your campaigns is important.

Quantity is also important because as you increase the number of search engines with which you are working, you also increase the complexity of your SEM campaign and the amount of time required to manage your business. Thus, at some point you reach a point of diminishing returns as you add more and more search engines with lower and lower traffic volume; if you need to spend an hour a week to get an extra 10 clicks, it’s doubtful that this investment is worth your time, even if these are killer clicks.

It goes without saying that the biggest quantity opportunity is on Google, followed in a distance second place by Yahoo Search Marketing, then MSN AdCenter, and finally Ask. There are of course plenty of other options to consider (7Search, Miva, Mamma, Findology, Enhance, etc), but if you have limited time and want to maximize the quantity of clicks you can drive, start with Google and work your way down the list slowly.

Quality: Clicks for the sake of clicks is only an effective strategy if your goal is to file bankruptcy as quickly as possible. You need clicks that convert into customers, or whatever your business metrics are. As with quantity, when it comes to quality, all search engines are not created equal. There are really two factors that go into click quality - where the search engine gets it’s traffic and what tools the search engine provides search marketers to filter the traffic they receive.

A search engine like Google or Yahoo gets all of its traffic from searchers who are loyal users of the search engine (we are talking about search traffic here, not content network traffic). These are pretty much the highest quality users you can find, because they have not been incentivized to visit the search engine, nor are they tricked into thinking that a paid link is an organic link. By contrast, some of the second tier search engines will pull out all the stops to get clicks for their advertisers. This can include placing your ads on parked domains (which Google does as well), in pop-ups, or embedded in articles to make the ad appear like content.

If you are getting pitched by a search engine you’ve never heard of before, you can be fairly confident that they are doing something strange to get clicks to your site. Be especially wary if the account rep claims billions of clicks a month from ‘distribution relationships’ or ‘people downloading our toolbar’ or something else rather vague. The odds are that this traffic is going to have low quality.

The second factor to consider is whether you can stem the tide of bad traffic on a search engine. Google has led the way at giving search marketers tools to cut out bad traffic. This includes features like negative keywords, match types, geo-targeting, day-parting, IP exclusion, site exclusion, demographic targeting, and category exclusion. If you know what you are doing on Google, you can quickly eliminate any click that doesn’t meet your conversion metrics.

Most second tier search engines don’t offer any of these tools. You are left at the whim of their claims of “industry leading click fraud prevention.” Of course, you can still get around low click quality on search engines by simply adjusting your bids downward until you hit your metrics. Just keep in mind the point I made above about diminishing returns - to play effectively in multiple search engines, you need to be able to pay attention to all of your search engines all the time. An unwatched search engine is an unprofitable search engine. If you are playing on search engines with questionable quality, even a few days away from your reports could cost you thousands of dollars.

ROI: At the end of the day, quality and quantity matter little if your campaign isn’t making you money! Though I recommend that you start with Google and do everything you can do make it profitable, sometimes this isn’t possible. Google is the most ‘efficient market’ out there when it comes to search marketing simply because all your competition will be advertising on Google. As a result, you may discover that despite your best efforts, you simply can’t make a profit on Google. If you have a revenue per click (RPC) of $2 and ten other competitors have RPCs between $3 and $25, you aren’t going to be able to profitably show up on the first page of the Google results.

As a result, you need to work harder to ferret out profitable opportunities on other search engines. This may be a case where there is value to mining the second tier search engines for nuggets of gold. If you can cobble together five search engines and drive profit without heavy traffic from Google, that’s a worthwhile exercise.
On the other hand, if you are successful already on Google, you should consider whether your overall ROI would increase more from further Google optimization as opposed to trying out lots and lots of search engines. I believe that until you have done everything you can on Google, spending a lot of time on alternative engines will not be ROI positive.

Audience: Different search engines have different audiences. While you probably won’t notice a huge difference in user behavior amongst the big boys of search, there are definitely search engines out there that cater to different audiences. A great example of this is vertical search engines, such as IndustryBrains, Business.com, Quigo AdSonar, FindLaw or WebMD. If you are trying to reach B2B buyers, you may find that you can grab a lot of these people through vertical search engines. In some cases, the conversion rate on these targeted engines can be significantly higher than what you’d find on a Google or Yahoo.

And as it becomes more and more clear that the search engine world is now “Google and everyone else”, you may start to even see some of the big engines starting to position themselves around specific demographic groups. Ask, for example, has been rumored to be considering rebranding itself as a search engine for women. Anecdotally, I have been told by other search marketers that they do notice significant differences in user behavior on MSN or Yahoo as compared to Google. While I can’t say that I’ve noticed this myself, certain audiences probably do have different search engine preferences.

Conclusion: Beyond recommending you perfect Google first and then move on to other search engines, I’ve tried to avoid giving specific recommendations for which search engines to use and to not use. I’ve done this because there is no one solution that will work for every search marketing campaign. Before I was an SEM consultant, I worked at a company where we routinely drove $100,000 a month of profit from a second tier search engine. When I recommended this site to a friend in a different industry, he was sorely disappointed - he couldn’t get any conversions out of the site.

Ultimately, you need to know how to ask the right questions about a search engine, allocate your time appropriately, and be willing to run a lot of quick and dirty tests on different search engines to find the right search engines for your business. And remember, this is just one of the seven sacred steps - just because you’ve found the right search engine, you’re work is not done. Stay tuned for part II of this series - choosing the right keywords - coming soon to a blog near you!

Search Engine Marketing is Not Alchemy (And Don't Trust Anyone Who Tells You Otherwise)

While it's always flattering to be introduced as a "search engine guru" or something to that effect, there's a dark side to such praise. To the majority of people in the world, search engine marketing is about as understandable as nuclear physics. Even when talking to Internet marketers in non-SEM fields, it's sometimes difficult to explain the nuances of search engine marketing.

To be clear, I do believe that anyone can learn SEM - it is not rocket science (or nuclear physics). But as I have said many times, SEM is 'easy to do, hard to do well.' I've personally seen many, many smart people try to launch their own SEM campaigns and fail miserably. So after sinking a few grand into Google's coffers, they finally hire an SEM expert to optimize their campaigns.

Sometimes, this is the smartest decision in the world. Many campaigns executed by non-experts have fundamental flaws in their organization, bid strategy, and keyword selection. In a matter of hours, I've made several companies more than $100,000 a year (a combination of cost savings and additional profit) by applying basic best practices to their campaigns.

But this is where people get a little confused. They hear stories like the one I just described and assume that search marketers have secret powers that are only conferred at midnight ceremonies behind the Google cafeteria. While it is true that I do have some special powers (I am color blind so I can see some colors than normal people cannot), the truth is that a search marketer can only work with the clay he is given.

This means that if your Web site is poorly designed, if your back-end economics are terrible, if you have been blacklisted by Google, or if no one happens to search for your product, there is a little a search marketer can do. I run into potential clients all the time who don't want to hear the bad news that the 'problem isn't your search marketing campaign, it's your [site/economics/product/etc].' They want to believe that the magical SEM fairies will descend from the heavens and turn their flailing business into the next Amazon.com.

This belief in the magic of SEM has created an opportunity for less-than-on-the-level search marketers to start making a lot of money selling what my friend Saar calls 'hope certificates.' For only two or three thousand dollars (upfront, of course), they'll promise you miraculous results on Google. Once the deal is signed and the check deposited, they'll definitely do some work on your campaigns, but the results will inevitably be less than magical. When you complain about this, only then will they explain that your site was not properly optimized/you were outbid/etc. By then, they've moved on to the next victim.

This bait and switch tactic has taken place for years in other industries. About five years ago a friend of mine was trying to raise VC money for his start-up. He got a call from a guy who said he knew several VCs interested in his company, and he just needed a few thousand dollars to connect him to these investors. Once the money was in hand, it turns out the investors weren't that interested, or most likely didn't even exist.

As the world becomes run by specialists, the average man on the street understands less and less about any specialization in which they aren't actively involved. Most of us take at face value the advice of a plumber, auto mechanic, or other specialized service provider. The difference between SEM and your local home contractor, however, is that no one expects miracles out of a home contractor. We all know that our 982 square foot condo is not going to be transformed into the Playboy Mansion. The same in not true for our online businesses. Entrepreneurs are almost always optimists who believe they are just a few clicks away from going public. As search marketers, we have an obligation to be honest - upfront - about the likelihood of success of any SEM campaign. SEM is hard work and it is complicated, but we've yet to figure out how to turn frogs into princes.

What's Better Than a Database of Intentions? Actual Intent. How Social Media Advertising Out-Targeted Search Engine Marketing

John Battelle described search engines as the "databases of intentions" - when a user enters a query into a search engine, that user is telling the search engine something about his wants and needs. Indeed, the entire point of a search engine algorithm is to decipher this user intent and serve up the most relevant results (and, of course, to stymie search engine optimizers at the same time).

You would think that a database of intentions would be the ultimate targeting opportunity for marketers, and - until recently - I would argue that this was indeed the case. The problem, however, with this database, is that it is an inferred database. Sure, we can infer that a user typing in "male pattern baldness" is a man who is balding, and in most cases we'll probably be right. But what of the person who types in "mortgage" - is he (or she) looking to get mortgage quotes, learn about the current housing crisis, do academic research, get a job in the mortgage industry, pay their existing mortgage, or something else entirely? And then there are words like "laker" which could be about the Los Angeles Lakers, Lake Trout, or someone with the last name "Laker."

As search marketers, we end up doing a lot of inferring. Often the difference between a successful and unsuccessful campaign rests on our ability to correct determine which keywords have the right inference for our campaigns. Since every search marketer is playing the same game, the result is that keywords with clear inference tend to receive much more advertising competition than keywords without. This is the difference between buying the keyword "Miley Cyrus" and "Buy Miley Cyrus CD."

Wouldn't it be great if users could tell us more about themselves? Their interests, their demographics, their personal history? To some degree, this information is available through behavioral targeting, or from user registration information on portals like Yahoo. But the behavioral targeting to date has only been broadly applied - you can choose a particular age range (18-35), or a particular geography, or sex, but none of this really presents an opportunity for personalized marketing.

Advertising on social media can, and likely will, provide the first opportunity for truly one-to-one marketing. The beauty of social media (at least right now) is that users have an incentive to provide lots of honest information about themselves. Think about your profile on FaceBook. You add your educational background, your interests, or relationship status, your current employer, and so on. You do this because you want to connect with old friends or meet new people like you. Indeed, the fact that your friends will see your profile is a further incentive to be honest since any wanton lies would be seen by people who know that you are lying.

This is much more valuable information than the behavioral targeting that can be gleaned from a user profile on Yahoo or from user-entered registration data on non-social networks. It's commonly accepted that users who are forced to fill in personal data purposely lie about their demographics. As one columnist put it: "Users lie to protect their privacy, they lie to protect their identity, they lie because they think their data will be misused or shared with third parties, or they lie because opt-in/out policies are misleading or mistrusted."

But at least for now, most social media users don't lie. The result is a goldmine of not just inferences of user intent, but user-defined extensive descriptions of their intent. And this presents the first opportunity for marketers to truly create micro-behaviorally targeted campaigns.

Here's an example of the micro-targeting currently available on FaceBook. Let's say I want to sell Iowa Hawkeye football tickets to football fans in Iowa. And for whatever reason, let's say that I want to upsell these users on a dating site. Check out the targeting FaceBook offers for this unique and granular user set:
80 people are in my target group - now that's a narrowly tailored audience. Granted, this targeting excludes people on FaceBook who have not fully filled out their profiles, but you can only assume that over time the percentage of people who complete their profiles will only increase.

Much of this targeting can be done on Google - you can buy the exact match "Iowa Hawkeye Football Tickets" and geo-target your ad to Iowa only. But the ability to serve this ad only to Iowa graduates who are men, etc, etc is not - and likely will not - be available in Google for some time to come. Indeed, I recently pointed out just how bad the demographic data currently available in AdWords really is in a recent post.

Of course, the flip side to this entire argument is that we are currently at a point in the development of social media where users still trust the social media networks and advertisers haven't truly embraced advertising on this medium. As a result, users are still honest about their personal data. At some point - perhaps soon - the scales may start to tip; once users realize that their personal information is being used by advertisers, their honesty may diminish or - as has already happened several times on FaceBook - they may revolt against the use of their personal data.

I believe, however, that despite some very public missteps in the user of personal data, the social media companies still have the chance to use this data in a way that satisfies privacy advocates but also provides the most targeted advertising available anywhere online. Who needs a database of inferred intentions anyway?

Upcoming Speaking Gigs and a Contest

I'm making a concerted effort to step away from the computer and actually start speaking at conferences and forums. To that end, I've got one (potentially two) interesting speaking gigs coming up in the next 30 days that I encourage all loyal Blogation readers to attend. You'll get to meet me in person and hear my sage SEM wisdom live!

Speaking Gig #1 is SMX Advanced on June 3-4 in Seattle. I'll be speaking on June 4th on the topic of bid management, an issue near and dear to my heart. I don't know who else is going to be presenting, but since this is an advanced conference, I'm planning on getting deep into the different bid management algorithms out there, as well as concrete ROI metrics upon which you should judge your bid management provider.

I'll also expand upon the points I've made about bid management in the past, as well as my over-arching theory that bid management is just one of several things you need to do to be successful at SEM.

Click the banner below to register, learn more, practicing your clicking, etc:



Potential Speaking Gig #2 is at the PPCSummit in San Francisco on May 19-2o. It sounds like there is about a 50/50 chance that I'll end up presenting at this one, but perhaps a sudden and overwhelming wave of registrations from Blogation readers will launch me to the keynote address (not holding my breath on that one). In general PPCSummit is a broader conference than SMX, with sessions for both beginners and advanced. Use the link above and you'll save $200 off the regular price (note, I'm not getting any commission from the link . . . though I should!).

They've also launched a social media/link bait contest which could be a way for one of you to get a free pass to the event. To win a free pass, you need to answer the following two questions: What Increased Your Search Marketing ROI Last Year? What one thing could you point to and say "THAT made the difference!" If you feel that you have an awe-inspiring answer, submit it here.

Got a conference or forum that you needs the Blogation touch? Contact me through this blog, or through my consulting firm, ppcadbuying.com.

Congratulations to Javier Andres Castro Pino - LinkedIn Group Spammer of the Year!

In my last few months as a group administrator for several LinkedIn groups, I've had my share of recruiters/networks/lonely people who have tried to infiltrate my highly targeted groups. You can read my extensive diatribe against LinkedIn group joiners here. And though I promised loyal readers that I wouldn't revisit this subject again, Javier Andres Castro Pino has forced me to break my promise.

You see, when Javier requested membership in the Online Lead Generation group, I naturally had to review his LinkedIn profile to make sure he was actually involved in online lead gen, and when it took my computer more than two minutes to load all his existing group memberships, I knew that I had finally discovered the ultimate LinkedIn group spammer.

After downloading his group memberships to Excel and then sorting them alphabetically, I was amazed to see that Javier had already joined over 1500 groups! Now I could just tell you about the groups that I thought were most amusing ("Friends of Darfur", but also "Friends of China" and "Friends of Tibet"), but I thought that the best way to truly give you the Javier experience was to simply list all of his groups for you and let you have the pleasure of perusing them yourself.

And in case you are wondering, Javier was rejected from the online lead gen group - somehow I don't think he'll notice. Here's the list:

--------- Popular Destination -------- Tourism/Hospitality/Wellness/Retail Web 3.0 Experiences

------- Web 3.0 Restaurants Experiences ------- (Now featuring: Left Bank Restaurants)

"NAMASTE"

"We Find You" Sourcing Strategy

.Net Developers Group

280 Group

401(k) Plan Participants

6 Degrees of Separation

A Children's Museum in Every Town

A Golf & Business Networking Group: FORE Networking

A Solo Business - Solopreneurs And Business Owners

A World Citizen Program - web 2.0 project

A World Wide Network

AACC

AAdvantage Executive Platinum Multi-Million Milers

AARP

Accounting Network

Actors and Casting Directors

ADCOLOR™

Ads of the World

AdTech (online advertising)

Advanced Innovation Methods (AIM)

Advanced Project Management Topics

Advertising & Promotional Merchandise

Advertising Professional

AFFILIATED AUTHORS

Aficionados of Classical Music

Africa - All Things Business

After the Invite

Agile Project Managers

Agilistas

AIESECAlumni

AIIM ECM (Enterprise Content Management) Network

AIMBA - Albo Italiano MBA

Alaska

Alfa Romeo Italy

ALOYN: Alimentación, ocio y negocios

ALTERNATIVE ENERGY NETWORK

Amateur Astronomers

Ambitious People

American Advertising Federation

American Cancer Society Supporter

American Heart Association

American ITIL

American Red Cross

American Society for Quality

Americans for American Energy

Amigos de Argentina / Friends of Argentina

amigos de Mexico

Anaheim Friends

AnalysisConnections

Anderson Gray Worldwide

Angel Investor Group

Angel Investors

Animation, Media & Entertainment

Anthony Robbins Group

Apple Professional

Are-You-MAD?

Argentina Business

Argentina-USA Leadership Connection

Arizona Professional Networkers

Art marketing

Aruban business professionals

Asia NetWork

Asia Trainer Forum

Asian Hedge Funds Group

Asociación Argentina de Marketing

Association for Manufacturing Excellence

Association Forum Network

Association of Information Technology Professionals

Association of Virtual Worlds

ASSODIGITALE - www.assodigitale.it -

Aston Martin owners and enthusiats

ATCA Open

Atlanta Help Wanted

Atlanta Maritime Association

Audi Owners and Enthusiasts

Australasian Talent Conference

Australia Business and Professional Network

Australia NetWork

Australian LIONs

Austria Business and Professional Network

Aviation Professionals

AWA - Advanced Web Analytics

Ayn Rand Readers

Baker University MBA Group

Balkan Business Projects

Balkan Business Systems

Bandhuwar-The Best Friends

Bank of CHINA

Banking Connects

Barcelona Professionals

Barrons's Network

Basel ii Compliance Professionals Association

Basho Technologies

BDPA

Be Financially Independent

BeautifulPeople.net

BeeMood

Bentley Alumni

BigCharts.com Users

Biofuel

Biofuels

biz BOSNIA and HERZEGOVINA

biz BULGARIA

biz CROATIA

biz CZECH

biz ESTONIA

biz GEORGIA

biz HUNGARY

biz LATVIA

biz LITHUANIA

biz MACEDONIA

biz MONTENEGRO

biz POLAND

biz ROMANIA

biz RUSSIA

biz SERBIA

biz SLOVENIA

biz TURKEY

biz UKRAINE

BizBash- Event Planners Gather

Bizbureau

BizTechTalk

Blackberry Addicts

BlackBerry Professionals

BlackSky

BLACKWOLF

Blog

Blogging About Business Intelligence - NL

Bloomberg Network

Blue Ocean Strategy

BMW Group

BMW owners (worldwide)

Boca Juniors Supporter

Bookcrossing-Italy

BossTalks.com

Boston Financial Network

Boston Young Entrepreneurs

Boston Young Professionals Association

Bowling is Fun

BoyScouts of America

BPO Executives

BPX2004

BrainStorming

Brand 3.0

Brasil - World Cup 2014

Brasil World Cup

Brazil - All Things Business

Brian Tracy Readers

BRICs Business Leaders

Bright Ideas & Entrepreneurs

British Computer Society

Bugatti Lovers

BuildBridgesNotWalls

Building Services Engineering

Business & Strategy Consulting

Business 3.0

Business Analytics

Business Club Milan-IN (LD Italia Official Supporter CLUB)

Business Development

Business Excellence Professionals

Business Ideas Generators

BUSINESS IN CHINA

Business in Japan

Business in Turkije ....

Business in Ukraine

Business Intelligence

Business Intelligence Experts

Business Intelligence Group

Business Intelligence Professionals

Business Opportunities Network

Business Portugal

Business Process Improvement

Business Process Management Professionals Group