Supernatural Agency: Online business tales

“I think computer viruses should count as life. I think it says something about human nature that the only form of life we have created so far is purely destructive. We’ve created life in our own image.”
- Stephen Hawking

I think I respectfully disagree with Hawking about whether these ‘lifeforms’ are all malevolent. You could certainly argue that the algorithms and search index bots created by the Googles of the world are in fact very similar to viruses: They travel the web from link to link gathering as much information as possible and transmit that information back to a private company that profits from it. Is this technically different from a virus that travels to your hard drive and transmits your personal information back to someone whose intent is to profit from it? The intent is the same but the word ‘personal’ is where the difference lies. When you get personal you break the law.

There is a lot of debate among online marketers about the tracking of individual behavior on the web. Behavioral targeting and retargeting use your surfing history to assemble a profile of what you’re interested in and then use that profile to serve up ads that they think you will be interested in. These ads appear in sites you are expected to surf to. For advertisers these ‘targeted by intent and relevance’ ads are far more valuable than taking a shotgun approach to a campaign. So is your privacy being invaded? Are they related to malicious viruses? Again, no, because they only know your IP address, not your identity.

This is where the line is drawn in the sand in online marketing. As long as they can’t identify us personally these techniques should be legal. To use personal information we must have opted-in or given permission for that use. As regulators look at the world of personalized marketing online this should be the standard benchmark for defining the difference between legitimate targeted marketing tactics and spammy illegal attempts to acquire personal information without permission.

Even though we put some Adsense units on this site we never had any expectations for them beyond a few clicks here and there. That’s because readers don’t come to this site with a purchase or product research in mind. The subject matter (Internet marketing and business) isn’t closely associated with buying.

Gawker Media, the big blog network, announced that it was selling off a few assets including Wonkette, a very popular inside Washington political blog that had over 5 million pageviews last month. With that kind of traffic you’d think they’d be crazy to dump an otherwise successful site. My guess is, that with a downturn  economy, a site like Wonkette which never had a strong advertising model- readers go there for opinions and gossip, not shopping, was probably seeing a big drop in ad revenues. I’m guessing their CPMs were in the toilet despite the high traffic.

To make money with a site you have to choose your subject matter carefully. Is the information you’re providing something people seek during a buying process? Are the types of purchases associated with the site Internet e-commerce friendly? Things like books, jewelry, gadgets, courses and other high value, easily shipped, high margin products work best. Things that are heavy, cheap and have low margins like pet supplies, large appliances and groceries don’t cut it.

Is the subject matter information-intensive? If the buying decision is easy you can’t add enough value via a web site or blog. Look at the ads on general news, opinion and lifestyle blogs/sites- they are often big brand ads for cars, insurance and other generic subjects that are neutral in relevance to the content. These kinds of ads generate almost nothing in CPMs (measured in cents per thousand impressions) and contribute to banner blindness.

Getting a formula that delivers higher revenues requires something a lot of Internet media entrepreneurs don’t want to do: hard work. I’m in the process of inserting relevant affiliate text links into the hundreds of articles on one of our kitchen design sites. We have display affiliate ads but they draw very poorly. The text links are carefully chosen for very high relevance but it’s a lot of work:

• Determine what the reader of the article is most likely to be interested in at that moment. I have an article that recommends getting material samples when planning a new kitchen. The reader wants to know where they can get these.
• I go through the various affiliate programs and find a vendor that not only offers samples but pays out for sample requests, in this case $15 for a sample order (because they know that if you have a flooring sample you like you’re likely to order that specific flooring- resulting in a big sale). This takes a lot of time to research.
• I build a text link with the affiliate code that includes the appropriate anchor text. Free Flooring Samples from XYZ, for example
• I choose the appropriate place the article and insert the link text inline with the content. I don’t hide that it is a link (different color) nor do I hide the brand because I want it clear to the search police that I’m offering legitimate relevant content even if it is commercial. And I want the reader to know that I considered their interest, time and needs when selecting this revenue model.

This is a lot of picky busy work but when I’m done I’ll have an information site that is optimized for revenue-generation in a way that the consumer appreciates. And it is sustainable because once the work is done the site is self-sufficient. On to the next one…

This is pretty crazy.

If you place a form on your web site Google can now enter any possible combination of information, radio button choices, checkboxes, etc., and index the results that come back for the form. They call this accessing the ‘Deep Web’, that part of the web that, until now, could only be accessed by a human entering information. It is deep in the sense that they now index all the possible underlying data in an online database that is not protected by a security layer (at least that’s how I read it).

Implications? Optimize those forms and your results pages and make sure they return relevant results or you might get purged.

And, BTW, dump your Microsoft and Yahoo stock- they are not even on the same planet with these guys.

This column for Inc. Magazine is one of the best takes on what constitutes a market-leading vs a market-following strategy. Taking a cue from a basic military principle, Spolsky sets up examples of how successful companies are constantly firing and moving forward, keeping their competition in a defensive posture.

Joel’s blog, Joel On Software, is a must read even if you’re not a techie alhough it has its share of programming posts. He runs a successful and innovative company so this advice is from the trenches- or should I say from an advance across the field?