Adam Jewell - Search & Affiliate Marketing

In work, in life, in whatever you do, it’s easy to get in a groove (sometimes it’s a rut). I started in Internet Marketing before Google was even around ResponseDirect.com became iProsepct.com (around 10 years). Traditional marketing never made any sense to me. You throw millions of dollars out the window and if your sales go up, then you throw more money out the window. Actually you don’t throw it out the window, you throw millions at an agency that has a bunch of creative types and some account managers and then they throw a significantly smaller pile at the media properties and hope your sales go up so they will get another pile of money to pick through.

On the web, people look for stuff. They search. People are scavengers, all they do online (in life?) is search. Search isn’t always turning to a search engine to search. It could be reading an article in search of information, it could be talking to a friend searching for critical information to make a decision but in some form or another people are almost always searching actively or passively.

The beauty of the Internet was immediately obvious to me. People tell you exactly or approximately what they are looking for in the form of a keyword search and you can serve it up to them to generate a sale, give them what they want in an honest and efficient manner. You have the opportunity to measure results, change the website to better align with what your customers want and zero in on making more money and helping your customer quickly and easily get what they want from you.

I originally intended my focus to be on Search Enigne Optimization (SEO). Fundamentally SEO is really simple. Instead of structuting a website like a catalog or Microsoft Word with the implicit assumption that the end user (or consumer) is already on your website or in your application, you need to assume that the consumer may enter the website from any page on the website. In order to account for this some redundancy is needed in site navigation so that someone who starts out deep in the site knows exactly where they are and how to get where they want to go. The copy, navigation and architecture of the site needs to reflect the way your target consumer thinks and evoke emotions that make them want to continue on through the website to complete a sale, generate a lead or take another action that will help you and your customer achive a common goal.

Despite the inital intended focus on SEO, I ended up focusing more on PPC search which I got pretty good at, maybe even damn good. I threw some PPC traffic at at least 100 different sites. Some got only a few clicks, others got millions. If they could convert the traffic, they kept getting traffic. If they couldn’t convert then the traffic stopped unless working with them was part of a more traditional fee for services arrangement. In that case they often paid to have someone to tell what to do and push out the message they wanted consumers to hear more so than they hired someone to generate sales for them or help them provide what thier consumers were actually looking for. Is it more important to say what you want to say and tell someone what to do, or would you rather make money? The goal of any business is to make more money now and in the future but in many such pay for services arrangements, the goal of making money often seemed to get lost in the shuffle.

When you operate in a fee for services arrangement you often have to do what the client buying the services wants you to do whether or not it makes any sense. If you have a lot of clients you can make a lot of money if the billable hourly rate is high, your costs are low or some combination of the two. Over the long term, this type of business arrangement can be a dangerous one in a fast changing industry like the web. While your clients stand still and direct you to do what they want, it can strip you of growth opportunities and hinder your ability to be on the cutting edge and be able to deliver what the market is ultimately going to need as opposed to what a slow moving organization wants NOW. You know Gretsky’s quote “I always skate to where the puck is going to be, not where it is.” Maybe it takes a number of concussions before most people think like that and more execs should get out there on the ice.

The web is a much different place now than it was when I got into this industry. It is more crowded, it is full of social media noise, traffic can come from many more places than just search but people are still scavengers.

Up until today, I had never purchased any books or ebooks or anything of the sort on any kind of Internet Marketing wiht the exception of Fredrick Marckini’s Search Engine Optimization book from many years ago.

Today, I decided to purchase the “Blueprint to Profitability” put together by Jeremy Palmer of Quit Your Day Job. I’ve known him for a while, always been a good guy and top performer in CJ. I know paid search, how to sit in meetings, write POVs, many things that work really well and everything that doesn’t. The thing I don’t know is how to make the things that don’t work go from not working to working. By this I mean fixing a paid search campaign or setting one up that will generate staggering results is easy IF the site is setup to convert the traffic. It’s fairly easy to tell if a site will convert traffic but I’ve got little to no skill at actually building a site that will convert traffic. When you are catering to someone else and building what they want instead of what works, what the analytics tell you works, and relentlessly driving in the direction the analytics tell you to go, it is like trying to run a marathon with your feet stuck in cement.

So tonight I finally broke down and paid for someone else’s expertise and bought the Blueprint For Profitability. Not to long ago, I came across a quote that struck me. “You Can’t Do What You Want By Doing Something Else” This should be the first step toward doing what I want and learning the things I want to learn that will power future success and growth to achive anything in the world of Internet Marketing. It’ll be something new, some actual brain food and will likely be an eye opener. As time permits and things progress, I’ll add some updates as to how things are going and share some results. As the title of this post states, “One of the Most Important Things to Know is What You Don’t” I know wht I don’t know and have for a while. It’s time to change that!

There is some business value in social media but for most large corporations, it seems to be more of a distraction than anything else. Twitter.com (www.twitter.com) and Facebook (www.facebook.com) are the two big social sites at the moment now that the MySpace (www.myspace.com) craze has died down.

In a recent Best Buy job posting, Best Buy put a requirement in it to have a Twitter account with 250 followers. Chances are if you have a Twitter account and 250 followers, you’ve been on Twitter for a while and have something to say that people might be interested in. On the other hand, some percentage of the Twitterverse is just a bunch of bots with fake pictures that scan user messages (Tweets) and follow them in the hope that they’ll be followed back and be able to hawk MLM, weight loss, penis pills, porn or something else. Many times, however, if you get followed right back it is just another bot on the other end.

Companies might do well to see if people are knowledgable in social media but requirements for a set number of followers on Twitter or friends on Facebook seems a bit odd.

Simply by posting nonsense messages on Twitter about weight loss, work at home, MLM and other high spam areas you can build up a worthless profile with lots of bots following you that will fulfill the requirements laid on out the job but be meaningless and absolutely useless.

People who really understand these types of things are the ones companies like BestBuy should be hiring especially if they don’t yet have anyone there who does.

The other question it begs is WHY? Why would it matter how many followers a person has on Twitter? The WHY question needs to be asked a lot more in business these days. It seems like 90% of the stuff most businesses do is unnecessary, unneeded and a big waste of time. Welcome to the Internet!

You can go follow BestBuy on Twitter.

It came as quite a shock to hear that Amazon.com bought Zappos.com (best known for shoes but now in a multitude of categories including apparel, electronics and outdoor gear). Amazon seems hell bent on eliminating the human touch and offering the lowest prices on everything while Zappos emphasizes the human touch, top notch customer service provided by real people and providing a great fun place to work at an ecom company. So what is going on here and what is the deal?

Let’s make some assumptions about Zappos financial performance.

In this Internet Retailer clip on Zappos, Zappos was expecting to generate 800 million in sales in 2007 and aiming for 1 billion in 2010. Midway through 2008, the economy started to crumble and it is likely that Zappos sales ae now somewhere between 800 million and 1 billion annually.

If I had to guess, I’d say Zappos reports sales as the total amount of merchandise ordered from the company before returns. Shoes have a notoriously high rate of returns especially when Zappos offers free shipping and free returns on all orders (not just shoes). For the sake or arguement, let’s say Zappos had 900 million in sales in 2008 and that this is the total amount of merchandise ordered by customers. If we assume a 35% return rate (It’s likely to be somewhere between 30% and 40%), then the amount of merchandise Zappos actually sold and shipped that it’s customers actually kept is likely to be around $585 million dollars. If these assumptions are roughly correct, then the price tag for Amazon is about a P/S (price to sales ratio) of 1.5. It’s anybodys guess what Zappos actual earnings are but I’d guess they are marginally profitable so the P/E for this valuation could be anywhere from zero (or negative) to maybe 21.5 if Zappos had a 7% net profit margin on the estimated $585 million in merchandise sales that were not returned.

While some people may exclaim that the P/S ratio on this deal is less than one, when returns are factored in it doesn’t look anywhere near that low. Zappos sales may very well be declining with the economy and they may be lowering prices as well to move more merchandise. Zappos is privately held so all we can do is speculate on the direction of sales revenue and profit at this point. Zappos did lay off about 8% of staff in December 2008 so we can assume the either anticipated growth slowed or maybe there was a decline in sales.

Zappos Culture and Amazon Culture A Clash?

Zappos has a very unique culture. It’s the human in a sea of automated systems and robots all squeezing every last bit of revenue out of consumers and pushing retail margins down to zero. Amazon seems to be one of those companies determined to put everyone else out of business by automating everything and pushing margins to next to nothing. So what do these two companies have in common? Where is the “synergy”?

As far as culture goes, maybe there isn’t any synergy. In his traditional style of rather open communications with employees and the general public, Tony Hsieh sent out a letter to employees and posted it on the CEO blog detailing the Zappos Amazon deal. It sounds like the two companies will remain pretty separate. Jeff Bezos, the head honcho at Amazon posted a video about the deal here:

So what kind of sense does this deal make?

The two companies will likely be better able to quickly ship merchandise when their warehouse space is combined.

Zappos will benefit from the Amazon technology infrastructure.

Maybe some of the Zappos.com culture will rub off on Amazon.

As an upscale retailer, Zappos.com may have been near break even or close to it as the economy tanks and open to this buyout to avoid having to seek out more investment in a tough economic environment.

Amazon takes a competitor off the table with this move and now has a “luxury” brand under its umbrella without having to build it’s own or cause confusion among its customer base in the marketplace.

Amazon is smart to keep the Zappos.com brand alive and if they can supply the technical infrastrucure and analytics to help streamline any weak points in Zappos, they can help Zappos make more money.

Amazon will also be well positioned with the Amazon discount site and the upscale Zappos brand when the economy returns to at least a moderate growth rate.

With the Zappos acquisition, Amazon also gets 6pm.com so now has three shoe sites (Endless.com developed to compete with Zappos) and of course Zapops.com and 6pm.com now.

Amazon probably found that it was tough to grow Endless.com to compete with Zappos.com and now they dont’ have to.

As the economic downturn continues don’t be surprised to see Amazon snap up more struggling retailers to build its portfolio of online brands across other top consumer retail markets.

Recently, the online retailer Zappos (www.zappos.com) decided to hire an agency. They put out an RFP to 16 agencies. Even 16 agencies seems like a lot. When word got out that Zappos was searching for an agency, lots of other agencies wanted the chance to pitch. In the end< Zappos said sure, why not and opened the pitch to more than 100 agencies. Apparently one of them (Ignited) was upset that Zappos did not seem to spend much time reviewing the pitch.

To evaluate even four agencies takes a lot of time, let alone more than 100! There is no possible way that anyone (or at least the add-on) agencies beyond the original 16 should really have expected to get serious consideration. In a process like this, it is just not practical for a company to go through that many proposals in any kind of detail.

In pitches I’ve been involved in, there are usually at most 5 agencies in the consideration set who may receive serious consideration from a client. From an agency perspective, how woud anyone think it made sense to be one of 100 agencies to pitch Zappos or most any other business for that matter? Granted, times are tough and if the agency has excess capacity, then maybe it makes sense to put some resources toward this pitch, however, pitching Zappos is likely to be unlike pitching most other accounts. Zappos has a unique culture, a unique way of operating and is extremely savvy in the socaial media space. They’ve run a huge affiliate program for years and have built one hell of a brand seemingly without to much outside help.

(Prospective) clients almost always get a great deal during the pitch proces cause they get some many cool new concepts and ideas. That just how the whole pitch process works. If they had sent out an RFP to 100+ agencies and not made that clear to all who received the RFP, then maybe the agencies would have a legitimate gripe about not getting as much attention as they would have liked. It sounds like the agencies all requested to be part of the selection process, to which Zappos agreed and informed the agencies of the tight turnaround time and the stiff competition.

Unless your company is going to spend a year evaluating agencies, there is no way it is worth trying to take the time to view proposals from 100+ agencies and even 16 may be a bit much. If you are an agency, chances are it is not worth your time to throw your hat in the ring when 100 other agencies are pitching for the same business unless it is to get your employees experience in developing pitch materials.

Finally, in ANY pitch in ANY business, the client is usually thinking WIIFM - What’s In In For Me? If that is not clear in the first few pages (or even first page) of a proposal or RFP response then the client will probably not continue through the proposal especially if there are 99 more of them to go through.

The wheels are falling off the economic train in the US. We’re bailing out worthless organizations like Bank of America and Citi Bank when we should just guarantee the deposits, let the banks fail and start over (because in time they will fail anyway). These institutions have become so large and are so full of worthless assets that they may be to big to fail, yet by piling on shit (for lack of a better word) like Merril and Countrywide into the empty shell known as Bank of America, we now have institutions that are simply to big to save.

There simply isn’t enough money available to make these institutions solvent. These banks are still giving out billions in bonuses while taking tens of billions in tax payer dollars. As written earlier, the US housing collapse is going to accelerate through 2012 until things begin to settle at a bottom. If you are trying to sell a house now, you better take an offer while you can or you’ll be begging for half that price in 12-18 months in many areas.

The US auto industry is a joke. Chrystler, led by Bob Nardelli, who did his best to kill Home Depot and walked away with 200 million wants another 5 billion dollars to keep going while GM is looking for around 30 billion. The US tax payers have no business bailing out a company like Chrystler that is owned by a private equity company and run by a character like Nardelli who padded his own pockets at Home Depot while screwing the company. GM may be a better investment but 30 billion is quite a large sum.

Failure of the US auto industry would seem to have the potential to send this country into an all out tailspin financially. It could result in millions of lost jobs directly and indirectly as well as a huge loss of tax revenue in the billions of dollars for the US government. It might actually make financial sense to bailout these companies, though we all know they simply don’t deserve to receive this kind of aid given the lack of smaller fuel efficient and alternative fuel vehicles in their lineups.

As more and more people lose thier jobs, the amount of money available to spend to keep economic activity going shrinks. Retail is in the tank. Onine retailers are faring a little better than physical stores but sales are still declining and consumers are putting off purchases in many cases.

What will the next few years hold? Right now it doesn’t look to good. Retail sales always fall seasonally in many industries and this summer will be no different. We may see hundreds, even thousands go out of business this summer as they struggle to secure credit and see retail sales decline significantly more than they already have.

The next round of housing collapse will be the result of “investors” losing their shirts on investment properties financed with Alt-A and Option ARM mortgages they have no hope of paying back.

It appears the US government has taken or will take the only sensible steps it can take in light of everything going on at the present time. While there is probably a lot of crap in the stimulus bill pushed through by the Obama administration, it at least appears to be somewhat sensible. People need to go back to work so that the economy produces something instead of simply providing tax cuts to the righ in the hope that tax cuts will stimulate spending and trackle down thorugh the economy. Spending on education, infrastructure, and health care need to be the bedrock of any stimulus and it appears they are. For far to long we’ve been spending lavishly on war and the military. Those bailout funds that will prove to be completely wasted money need to go to building this country back up.

There is a good chance you will get laid off this year, you might lose your health insurance, the job market and housing markets will get much worse before they get better and the stock market will continue to fall with a bottom somewhere between DOW 3,000 and 5,000 and you’ll continue to watch your 401K balances in any form of equity mutual fund fall dramatically.

Over the next 3-5 years this country and many others will continue to struggle. Companies will need to change. It doesn’t take a genius to realize this. When you look around at your own company and any clients you may have you probably see the same incompetence exhibited by the financial companies in the US. Policies, proceedures and initiatives that may be well intentioned but will lead nowhere and have no purpose, things being done in the same way they have always been done because they have always been done that way and top level executives completely clueless towing the line to protect their own jobs while the company and its business tanks.

Once we work through the credit, housing, job and overall financial crisis things will start to rebound. That may take a few years but we’ll get there. Prepare for an intense recession of full scale depression. Keep your fixed costs low, work smart, learn all you can and be prepared for whatever adversities then next few years will bring.