Supernatural Agency: Online business tales

It is increasingly apparent to me that we curently have two distinct business models on the web. Online applications including search, e-commerce, productivity and information management are replacing the antiquidated desktop proprietary software model. The challenges with this model are monetization and scale.

The other model is content delivery or media property development. Here we create sites that either deliver news or vertical-interest information including social components. Monetization is naturalized due to the relevancy algorithms used by ad networks and search advertising. The challenge is the creation of highly relevant and profitable content combined with developing traffic.

Semantic search is going to combine these two models in ways that will make them indistinguishable to the user. A query involving a potential shopping decision already combines search, reviews, specifications, pricing and transaction-capability, vis a vis Amazon. Hundreds or even thousands of web resources are utilized in these semantic searches and combined to create an idealized response, one that completes the search in one destination. Understanding and building these semantic destinations will be the new Internet business model.

Today’s announcement by Google and French global advertising mega-agency Publicis of a partnership to automate the creative aspects of online advertising is interesting to put it mildly. If I were in the traditional agency business (and I have been) I’d be very very nervous.

Google CEO Eric Schmidt offered up the possibility of this partnership creating something called ‘open source advertising’ which I assume means that they will look into developing automated ways of developing effective creative and brand positioning on the web. If this is possible (and I imagine that this partnership is more about finding that out than someone already figuring it out) then the typical agency creative team will be marginalized when it comes to Internet Marketing. Ordinarily one might think this was bad except that the typical agency creative team has already marginalized themselves by pretending that online marketing was some kind of novelty item that was beneath the interest of the brand mavens.

Imagine a scenario where a mom and pop business wants to get the most out of their limited marketing budgets. Because they can’t afford agency rates and their tendency to overspend, these businesses typically let ad sales reps in the local media choose their buys, create their ads and manage their campaigns, for ‘free’ of course. This was the business equivalent of letting the fox manage the chicken coop. Junky ads, lousy positioning, budgets spent with no measurable return and the consequent belief that ‘advertising’ doesn’t work.

Now imagine a dead simple Google process for that business, one that automates keyword selection, creates ads, targets geographically, demographically and by price, all automatically and a system that returns a specific report on ROI, daily. I think our Mom and Pop business owner would dig that (and that growth business owner and those corporate shareholders…).

These guys could own advertising as we know it and as it will become- I’m watching and wondering…an open source marketing network?

From my climate change blog:

It is rare when my two fascinations, climate issues and Internet marketing, cross paths. However, according to Information Week, broadband usage is going to save the equivalent of 11% of our annual oil imports over the next decade:

” The pervasive use of broadband Internet connections and the tools and practices they enable could reduce greenhouse gas emissions by some 1 billion tons over the next decade, according to the American Consumer Institute. Widespread adoption of broadband in the United States alone would cut energy use by the equivalent of 11% of annual oil imports, the group says.”

As a telecommuter I can tell you that I’m driving far less than when I had a short seven mile commute to work. Given that average commutes in major metros are over 45 minutes each way or 40 miles a day, I can see how broadband makes a dent. Add in the huge savings as business travelers begin to use the really effective teleconferencing services that are starting to emerge and you’ll see big savings in both oil and emissions.

As gas prices rise, and public transport falls behind in its ability to serve increasing demand, alternative work arrangements will become the norm. I see things like temporary centrally-located office spaces being created for face to face meetings that are closer to home for all attendees. Hotels have served this purpose for years and will move even further into the business services sector. I live across the street from a hotel and it would be great if they provided a rental video conference suite for meetings. They may see it as a threat to their core business but it would be more than made up by selling us $7 a cup coffee and $12 croissants…

Good news for Internet businesses…

We are starting to see widespread indicators that we have been in a recession for a few months. There is a well-known meme that once you see acknowledgment of a recession in news headlines it means that the recession itself is nearly at an end. A glance at the NYTimes this morning has the R word popping up all over. So what does this mean for domaining and search marketing?

In search this means a big uptick in spending because PPC is so much more trackable and efficient when compared to costly traditional advertising. Traditional advertising is brand-focused, relying on strong brand awareness to create a premium over generic-branded products and services. In a strong economy brand equity has more value, in a recession people are looking to save money and brands are less important. In search value is the primary driver- we look for the best product at the best price. Marketers can easily track ROI in search. Ironically this makes search the more conservative marketing tool in that we know where the dollar goes and what it returned. You also do not incur the creative and production costs associated with print, video, outdoor, etc., a major cost differential. All your dollars go into bids and results. In a tight economy watch the dollars flow to the web.

For domainers this creates a long-term opportunity married to a short-term downturn. With less free flow of capital (liquidity) in the market the short-term market for selling domains goes down. Less liquidity equals lower prices and soft markets. The opportunity is in the recognition that if more dollars are flowing to search then there will be more demand for places online to host relevant advertising. As domainers, we are online media owners; that is, if you develop…

So, strategically, we need to sit down and plan for the long term so we’re situated to take full advantage when the economy turns upwards. Selling domains right now seems counterintuitive if you buy my theories here. Developing strong content around your domains and building traffic increases value as more marketers move dollars to the web. Think media ownership rather than URL ownership.

A final note. This recession is driven by the mortgage mess and oil prices. The mortgage mess will eventually be resolved with some short-term catastrophes. Oil will never go down to levels seen even a few years ago- worldwide demand is exploding ($2500 cars in India and China!). For domainers and online marketers this means more consumption on the web rather than costly travel to brick and mortar stores. It also means you should be thinking through a global approach to domaining- no matter how isolationist some dreamers would like to be, we’re in a global economy and our domains are global storefronts.