Supernatural Agency: Online business tales

We’ve had three major brands for whom we are affiliates end their relationships with us because we are located in NY State. Never mind the fact that our servers are somewhere on the West Coast and that these retailers have no brick and mortar presence in NY. Our totally dysfunctional and short-sighted state government decided that out of state e-commerce companies selling on the web in NY should pay our insane (8.5%) sales tax even though the law for mail order companies states that they don’t have to charge the tax as long as they have no physical presence in the state.

Apparently a website that does not even sell the products and does not physicaly exist here is now a cause for ordering merchants to pay sales tax. So, what about the millions of paper mail order catalogs sent into our mailboxes from out of state companies- aren’t they a physical presence? And since when are online media that advertise services on a commission basis (very common in print, radio and broadcast) a cause for claiming a physical presence?

I do not think this will hold up in the courts as it is a poorly though-out law filled with loopholes. In the meantime don’t plan on building an affiliate marketing business in NY.

Update: Two more merchants have sent notices specifically detailing that the NY law was the reason they were removing us, hopefully temporarily (as they said). Interestingly, Linkshare followed with a generic notice saying we had been removed for unstated reasons- I think they’re worried about losing a lot of other merchants if they get wind of this.

So, if Google has PayPerAction (PPA) programs in which they get paid when a conversion takes place should they be paying taxes? They have a big physical presence in NY.

This is the lid coming off a big can of worms…

Running the numbers on a developed site can be a little confusing but understanding how they work can really help you value a site and determine where to spend your time and money.

We track Adsense on quite a few sites. Here’s how I parse the data:

• Make sure you set up channels for each site and ad unit. This is absolutely essential.
• Look at your thirty day totals by channel/site to determine highest performing site(s)
• Remember that Google measures by impression not page view. Three units per page (the max they allow) means 3 impressions per page view
• Google eCPM rate is your earnings per 1000 impressions. If you have three units per page then you have to triple that number to get your average revenue per page view

An example: We have a top performing site that, using the tools above, returns 4.8 cents per page view or $48 per 1000 page views. This was surprising to me but the knowledge meant that we needed to focus a lot more attention on driving traffic to this site since even a slight daily bump adds up really fast.

The same site averages 2.9 page views per visit so a visit is worth an average of $.14. A thousand visits a day is worth around $140 so spending anything up to that amount daily to drive traffic is worth it, remembering that sites generating $50,000 in annual revenues (which is about what those 1000 visits per day gets you) are worth a multiple of those revenues to a buyer, probably at least $300k. You could argue that spending far more to drive traffic makes sense because you’re losing in the short term (aka, investing) but building equity in the long term.

Know your numbers- you can easily set up a spreadsheet to track them.

BTW, the site I’m using as an example is in an enormous, information-hungry consumer market involving a lot of spending. I’ve also left affiliate revenue out of the equation to simplify things.

As you may or may not know I recently joined Techrigy which provide search, discovery and analysis services for social media including blogs, wikis, social networks, Twitter, YouTube, etc. It occurred to me that if Microsoft wants to break away from Google they should buy us and own search in a huge part of the web that Google isn’t indexing.

I’m only half kidding (although it would result in a nice paycheck for me!). The idea of buying Yahoo’s crappy search engine seems pretty half-baked to me. You get the idea that the geniuses at Microsoft aren’t exactly on the ball…

We see lots of ‘domains for sale’ lists but this one takes the cake…someone thought .info was a good idea.