The other annoyance is the waste those schemers represent. Their elaborate devices take time, energy and talent to deploy. These folks are sharp enough and skilled enough to get a real job, but instead of building something they choose to be leeches on the backs of those who earn an honest day’s pay.

What am I railing about? Two different scams.

SCAM #1: Affiliate thief

The client prohibits affiliates from bidding on their brand name. Oftentimes, we’re prompted to look for affiliate theft because sales on our client’s trademark drops off the table for some reason. We have tools to help detect this abuse, and normally a quick scan of the destination url reveals that the traffic is really going to www.dirtbag.com or whatever after the Google redirect. But check out this scam:

The top is what our analyst spotted; it looks like traffic is being passed from Google to our redirector rkdms.com, but it isn’t! Not yet. This thief actually creates a spoofed version of our normal redirector and sends the traffic to her/his domain. Then — devilishly clever — after it’s gone through the affiliate’s site to get their credit tagged, the traffic is sent back through the real rkdms.com redirect (shown below the spoofed version) and on to the client’s site.

The net effect? RKG doesn’t see a drop in brand traffic through paid search — the user got our tracking tags. But, the affiliate still gets the commission by inserting its tag as well. We don’t see a drop so aren’t prompted to look for the theft, and a casual look at the destination urls on the trademark ads wouldn’t look out of the ordinary because of the spoof. Fortunately, our analyst had the razor sharp eye to spot the scam.

SCAM #2: SEO Link spam

RKG Blog generates many conversations with our readership, which we deeply appreciate. We also get a lot of comment Spam from both the standard spyware, malware villains and SEO companies looking to build link networks without doing the hard work necessary to do it right. Akismet has caught 190,000 of the first type, but has a bit more trouble spotting the last type.

Usually this later class of spam that makes it passed the filter is fairly easy to screen manually: “hi, love your blog, keep up the good work” type of generic message with links embedded. The more advance folks do something like: “Great post on [Title]” with dynamic insertion of either the title of the post, the author or a chunk of text from the post.

This morning, the prize winning dirt ball actually got a couple past the gatekeeper because instead of grabbing something easily identifiable, s/he grabbed a complete sentence from one of the other comments on the page so it looked like a well thought-through reaction to the post. His bad luck was that one of the comments he placed stole a snippet from one of my comments which I recognized as sounding a bit too familiar.

Clever, very clever, and evil.

Pretty clearly, the folks above have serious programming skills. They could undoubtedly get jobs with real companies doing positive work. Instead, they’ve chosen the Madoff route. I hope it leads them to the cell next to Bernie.

Technorati Tags: affiliates, link spam

Or do they?

Over the years a number of other service providers have approached us offering to refer their clients to us…for a fee. They usually want us to return the favor and refer our clients to them. Usually these deals are structured that the referring party collects some percentage of the revenue generated by the party that got the customer.

In the early days of our company, we signed a couple of these deals with companies we held in high regard. We figured: we need to get the word out, and we’re too cheap to buy advertising; we won’t refer our valued clients to vendors who aren’t good at what they do, that would be wrong, but if we like the other company, what’s the harm?

We only did a couple of these deals and terminated the last of them two years ago. Ultimately we found that most of the prospects referred to us weren’t a good fit for our services, and, we found that we really didn’t have any interest in pushing particular vendors on our clients. There were all kinds of headaches associated with which clients were really referred by the other party versus companies we were already speaking with and vice versa, but moreover, it just didn’t feel right.

To our thinking a company serves the people who pay them. We have no interest in serving anyone other than our clients. Indeed these deals strike us as a conflict of interest. Are we recommending said vendor because we think they’re a great choice for our client, or are we trying to make a buck off a referral? We don’t want to be in that business.

It seems that these deals are increasingly prevalent, and the number of firms seeking mutual referral deals with us keeps growing. It’s also become clear that many of these deals are non-exclusive. In other words, we might be one of many PPC firms recommended by said vendor. That raises the question: which firm is at the top of your list? The answer: the one that pays the largest commission. This starts to look very much like affiliate marketing in B-to-B services and for the same reasons we don’t think much of affiliate marketing as it’s practiced, and we don’t like commissioned sales, we don’t like this trend either.

Third Party vendor rankings work pretty much the same way as far as we can tell, but that doesn’t bother me as much. Most folks probably recognize that the rankings track closely to the amount of advertising the vendors buy and that’s to be expected. Profit making trade organizations need to take care of their advertisers and/or paid clients because they are their principal source of revenue.

But I don’t think the scope of these mutual referral networks are well understood. Seems to me folks aught to come clean and say: “Hey, I think the world of company X, but you need to be aware that they pay me a commission for referrals”.

Rest assured that if RKG speaks highly of another vendor it is because we think highly of them. You can also rest assured that if you ever hear someone say nice things about us, it’s not because we’re paying them to do so — we aren’t.

All in favor of transparency say “Aye”!

• Smart Bidding Requires Smart Clusters My monthly column for Search Engine Land in case you missed it....

Have companies trained their employees to behave like rats? When I think of commissioned sales I can’t help thinking about those rats. “Be nice to the next person who calls and I’ll give you a treat!” What ever happened to the notion of: “Do a good job for the company because…it’s your JOB…, because you take pride in your work…, because you’re not a rat”?

The cynic will say: “Behavior modification works.”

Sure it works. But with humans the rewards and punishment don’t have to be immediate. Paying fair salaries, praising good work, and respecting the opinions of the people you work with goes a long way. Promoting and giving raises to people who’ve earned them, and dismissing those who don’t meet expectations establishes a much stronger, forward looking culture. There are tangible benefits to this type of system as well:

1. It doesn’t generate fights over who gets the credit. It may be annoying when a co-worker claims credit for one of your good ideas, but not nearly so much as if it takes money out of your next paycheck. Well run companies know who their stars are and aren’t fooled by the pretenders.
2. It doesn’t provide incentive to cheat the system. Every company with a commissioned sales force can give a long list of frauds employees have perpetrated to make a buck.
3. It doesn’t require the company to create elaborate mechanisms to prevent 1 & 2.
4. It keeps folks focused on what’s best for the company. For example, consider the hostility with which commissioned sales folks greeted websites and in-store kiosks.
5. It recognizes that there is such a thing as a bad sale: whether it’s signing a client who has unrealistic goals, or selling too much computer to a senior citizen who just wants email. The short term benefits are vastly outweighed by the long term consequences to your brand.
6. Like MBO goals in general: what’s right for the company isn’t always factored into the goals and usually can’t be. The “right” thing isn’t always cut and dry, and often changes depending on the circumstances. How many times have you seen companies role out unprofitable promotions at the end of a fiscal quarter just to hit some bogus top line goal? Stupid, but very common.

I will probably be accused of being “old school”. Guilty. Undoubtedly, someone will point to case studies showing MBO goals leading to tremendous performance improvements. I don’t find that compelling logic. If a company hires poorly and/or manages poorly perhaps retraining staff with immediate carrots and sticks will raise performance levels, but that doesn’t mean it’s the right way to manage.

By hiring people who take pride in their work — encouraging them to do what’s right for the company, compensating them for consistently performing well, and firing those who perform poorly — quality people will rise to the challenge.

Clearly, this won’t work in every business. Paying fruit pickers by the peck makes sense, as migrant workers can’t develop long-term loyalties, and the goals really are pretty easily defined. But I don’t think it makes sense to treat professionals like migrant workers.

Indeed it strikes me that much of the commissioned sales/MBO garbage simply serves to “eliminate the need” for prudent management. If employee compensation is based strictly on meeting objectives then management doesn’t need to think about hiring, and doesn’t need to provide expensive training or supervision. Hire bunches, let them cannibalize each other; the strong survive, the weak quit and the management doesn’t need to go through that icky business of firing people.

Maybe this works financially in the short term, but what happens to a company’s brand in all that mess? Maybe no one cares anymore? When the goal is simply to inflate a top line and sell the company for a quick profit, maybe reputation doesn’t matter.

I prefer to work for a company built to last for generations, and I think customers and clients can tell the difference, too.

Technorati Tags: Commissioned Sales, MBO goals, Performance Bonuses, Revenue Sharing

I don’t hunt, but my cat does, and I’ve come to admire her professionalism, judgment and efficiency. Sometimes it’s hard to tell that she’s working. She sits quietly staring at a pile of leaves, or a rock wall, or a patch of thick grass for hours on end. Experience has taught her that chasing squirrels is waste of time and energy, so she focuses on what works. At the end of the day, there is a pile of small rodents lovingly laid on our doorstep to be admired and possibly served for dinner if we followed the cat’s intent.

Contrast the cat’s approach to the average dog. The average dog dashes madly about the yard chasing squirrels, birds, bees, leaves, its own tail and anything else that moves. The dog will bark and bark and make a great show of its efforts, but at the end of the day the dog will have nothing to show for its work.

If you’re interested in catching rodents get a cat. If you’re interested in showmanship get a dog.

PPC firms fall into two camps along similar lines. Those who understand how to make search cost effective for their clients are analytical, empirical and know which rat-holes to avoid (remember “click-to-call”?) Less sophisticated firms focus on the external trappings of “Best Practices” published by the engines. These folks furiously rearrange deck chairs and do a great deal of barking about campaign structure, quality score and conversion funnels.

Oftentimes you can tell whether a firm is a “hunter” or a “barker” by the way they go to market. Barkers can promise huge performance benefits without looking at conversion data from the existing program. That’s always struck me as an amazing talent. Hunters on the other hand study the data carefully before evaluating the success of a program, and are uncomfortable about promising results recognizing what is and what is not within their control.

In some respects, the “dogs” are more comforting, particularly during difficult times. “Look at that! He’s chasing everything, he’s goin’ wild, that’s a good boy. He’s optimizing, he’s fine tuning, he’s leveraging, he’s bridging gaps between the strategic and the tactical…he’s awesome!”

Pretty clearly, the right way to evaluate a PPC agency isn’t by the number of initiatives they chase, but by the results they generate at the end of the day. Action for the sake of action isn’t simply unhelpful, it’s a distraction from the tasks at hand.

In the next week we’ll discuss the right way to evaluate your program in a down economy, and provide more tips on how to distinguish between quality PPC management firms and the barkers.

Technorati Tags: PPC-Management

Sometimes it’s hard to tell. Oftentimes it’s a bit of both.

The critical question: what fraction of the data you look at each day is actionable? If you look at the same reports each day or each week, ask yourself: are there steps I could take based on what this data might reveal that would make the numbers improve going forward? If the answer is “no” then does it make sense to spend time looking at that report?

As staffing gets leaner in retail we all need to figure out how to do more with less. Part of the solution is to spend less time looking at numbers we can’t impact and more time taking steps that will positively effect the numbers that matter.

Habits are hard to break. Here are some questions that might help separate the actionable from the non-actionable and the KPIs from the not-so-KPI:

• Has looking at this data ever made me do something differently?
• Are the Key Performance Indicators I study actually KPIs? Two examples of common KPIs that aren’t:
  1. Site Conversion Rate: If your site conversion rate goes down, is that bad? Or, does it simply reflect either the addition of some lower converting traffic (perhaps due to an increase in competitive search traffic) or decrease in higher quality traffic (like the end of a catalog mailing cycle). Much time can be wasted chasing explanations to these changes that don’t result in any meaningful action.
  2. Average Order Size: If the AOV drops does that mean you’re selling fewer big ticket items, or more low ticket items? A decrease can be good or bad, and chasing the source of fluctuations is time consuming.

  We’d suggest that if changing a metric in one direction can be either good or bad, then that metric isn’t really an indicator of anything. Instead, go either to the next level higher (Site Sales), or the next level lower (AOV by category or CR of top search keywords) to find the numbers that are less ambiguous.

• Do I look at this report because it’s cool, or because it’s useful? I remember long ago looking at some website analytics reports (heat maps, next page/ previous page, etc) thinking: “Wow, that’s cool, but what would one DO with this info?”
• How much time should we spend benchmarking? Being consumed by what competitors are up to makes sense only to the extent that you can react to it intelligently. If their paid search ads are higher on the page than yours you can be pretty well assured that they’re generating more traffic. But, you don’t know whether they’re overspending for that traffic. It might be wise to see if perhaps their prices are lower, or their selection is more comprehensive — some reason to believe they generate more sales per click and hence can afford to spend more per click. That knowledge could generate action on the part of merchandising. Absent that, since you can’t know what they’re spending, why pay attention to where they are?
• How many meetings do you attend that do not produce changes in direction? Any way to eliminate those meetings?

Data should be used to take positive action. If we think about the dashboard metaphor: dashboards provide data that helps you drive, but if you stare at the dashboard you’ll wreck. Right now, its in all of our interests to avoid wrecks!

George

They say you don’t want to see either laws or sausages being made, but I think they are wrong. Imagine how much more transparency and accountability our government would have if it were possible to see what changes were made by whom, who inserted extraneous riders into various bills, and generally to track the influence of various interests by the new visibility into their actual control over the knobs and levers of government.
–O’Reilly Radar, 7/13/07

Such a system is so overdue.

Transparency makes for better business, and for better government.

Link: American Recovery and Reinvestment Act of 2009 (full text here)

Technorati Tags: American Recovery and Reinvestment, congress, government, h r 1, house, HR1, o reilly, OReilly, senate, version control

I’m not a regulation fan, but check scams and other such forms of outright trickery should be illegal.

These schemes hurt the public. They also harm legitimate marketers by eroding trust.

Yuck.

Worse, captcha screens lacking a “generate another” link.

What is between the “h” and the “w” here? I have no clue.

Argh.

Technorati Tags: Miscellany, Rants

Steve Yegge usually rants about programming, not business. So nearly all of his excellent diatribes are off-topic for our marketing/business blog. This week, however is a business topic: Steve attacks “gathering business requirements.”

Yegge’s point — if a company needs research to determine what customers want, then the company is probably too far from the customer, and the software or product they produce will likely miss the mark.

You can look at any phenomenally successful company, and it’s pretty obvious that their success was founded on building on something they personally wanted. The extent that any company begins to deviate from this course is the extent to which their ship starts taking on water.

And the key leading indicator that they’re getting ready to head off course? You guessed it: it’s when they start talking about gathering business requirements.

Because, dude, face it: if it’s something you want, then you already know what the requirements are. You don’t need to “gather” them. You think about it all the time. You can list the requirements from memory. And usually it’s pretty simple.

Steve Yegge: Business Requirements are Bullshit

Technorati Tags: Business, business-requirements, customer-research, Google, Rants, steve-yegge, steve-yeggie, yege, Yegge, yeggie

(AP)

Google officially filed for Chapter 11 protection today marking the end of an era. The once iconic giant is expected to sell off its assets and the still popular google.com domain to rival MSN. While the announcement was not unexpected given the rapid decline in Google’s revenue over the past 4 quarters it still left many industry analysts wondering how it could happen.

“It all started with Quality Score” explains Nicolai Took, former VP of product development for Google. “Originally ads were served based on the advertiser’s keyword and match type and ranked based on bid times the click-through-rates. That was great for us in that we served incredibly targeted ads, and we maximized revenue from those ads that were most responsive to the user’s search.”

“However, we weren’t satisfied with the results, and neither were our users” continued Took, “We noticed that if the ads landed on cheesy AdSense Spam pages, that was a lousy user experience, so we wanted to clean that up. To do that we needed some way to arbitrarily penalize the sponsored listings tied to those pages. The notion was that we’d just punish the ‘bad’ landing pages and that would be it. Later, we realized that if landing pages were really slow loading, that was a bad user experience, too, so we folded that into QS as well.

“All that was good! We were rightly focused on making the ads as useful as possible to our users, thus encouraging them to use the sponsored links. Quality Score was the right idea, but it opened up Pandora’s Box in a very real sense.”

“QS gave us a black box to do essentially whatever we wanted to do in terms of ranking the sponsored links, and we took that freedom and ran with it. Our VP of Accounting, Ewell Cheatham, first came up with the concept of Expanded Broad Match. He said ‘If a company is willing to spend $4 for clicks on keyword “A”, and only $0.25 for clicks on Keyword “B”, why would we ever serve Keyword “B”?’ He said: “As long as the CTR of “A” is more than 1/16th of “B”, we win!’ Some people at the meeting objected that the keywords might not have anything to do with each other, but Cheatham persuaded the group that the market would sort things out. If it worked, we’d make more money, and if not we’d simply dial back up the relevance and go our merry way.”

“The problem was, it worked great!” said Took with a grimace.

“It turned out that people didn’t read the ad copy very carefully, so the fact that we were serving the ‘wrong’ ad didn’t depress the CTR that much. The more emphasis we placed on the bid and the less we placed on the relevance the more money we made.”

“Some of the savvy PPC agencies caught onto this quickly and started being very careful with match types and developed clever ways to get around this process, but most didn’t. And as our addiction to pleasing Wall Street grew we also realized in late 2008 that Quality Score gave us the ability to penalize the folks who didn’t play the game we wanted to play…”

“That’s when our lead council, Agnes Fairchild, resigned. She saw the FTC, FCC and SEC troubles brewing and wanted no part of it.”

Asked whether the government regulatory actions played a major role in Google’s eventual collapse, Took responded “Yes and no. It certainly didn’t help, but the real problem came from ignoring our users.”

“We thought the fact that CTR didn’t drop much initially meant no harm was done. We figured as long as revenue grew we must be heading in the right direction, but we lost sight of two important trends: First, we didn’t realize that much of the revenue growth in 2007 through 2009 was really the last phases of rapid growth in the channel. When more and more people were poring into search and using our engine it hid a lot of tactical mistakes. Second, we thought that CTR was the best measure of satisfaction with results, but it turned out to be a trailing indicator, by the time CTR tanked we were already sunk.”

“The real measure of success of course was whether people found what they were looking for after clicking on a link. Because we chose high bid ads rather than the ads that exactly matched the users search the landing pages were wrong, either too deep or too shallow, and users left the retailer’s sites frustrated.”

“We hated the long tail. If anyone in the office mentioned the long tail he or she had to put a buck in a penalty jar. Huge keyword lists were great for retailers, but they ate our bandwidth and depressed our revenue, or so we thought. As we saw it, they just allowed thorough agencies to get better conversion rates at lower CPCs, and we didn’t see how that benefited us.”

“For a while, everything was great. People didn’t land on the right page, but they would come back to the original SRP and click on another link hoping to find what they wanted — we made even more money getting multiple clicks from the same users. We were really the only game in town at this point, but that’s when MSN came out of nowhere.”

“We had always planned that the sponsored links would be for retailers and the organic links for information. By penalizing retailers in organic rankings in favor of “information sites” we would encourage folks to use the ads when they were looking to buy something and the organic links for information. Unfortunately somebody didn’t get the message. As our sponsored links became less and less relevant people started doing their shopping on MSN’s platform.”

“Advertisers jumped on it and revenues flowed to MSN. By the time we realized what was happening the word on the street was out: use MSN for shopping, use Google for information. It was too late for us to reverse the trend…”

Asked for final reflections, Nicolai Took responded with a forced smile: “Remember when ‘Google’ was a verb?”

Technorati Tags: Fun, Google, Rants