John Andrews is a Competitive Webmaster and Search Engine Optimization Consultant in Seattle, Washington. This is John Andrews blog on issues of interest to the SEO community and competitive webmasters. Want to know more?  Competitive Web & SEO
April 19th, 2007 by john andrews

A “Market for Lemons”, a Nobel Prize, and Snake Oil SEO

As a commercial competitor, I seek to understand my markets. If I can understand what the market is doing, I can position myself and my clients profitably. If I can understand how the market reacts, I can interpret my competitor’s activities in light of their likely performance in the market. In other words, I can compete.

A very long time ago I got into a discussion with my father about how deals are made, and how prices are set during negotiations. My father was a civil engineer working with large businesses and governments, and I was a computer networking consultant building and repairing systems for customers. I postured that the party with more information could allow the other party to set the price, providing guidance if the initial price point represented inadequate profits. In this manner, the less knowledgeable party would have to expose his value position, and thus indicate the “reasonable price” he would ultimately be willing to pay for the transaction. The more knowledgeable party had the advantage, clearly, but the important point for me was that in that marketplace it was not supply and demand nor value that set the price. The two parties did not check the offer price against a market price, but rather one-sided perceived value. And the perception of value was defined by the accessibility of information. A smart, more knowledgeable party in the transaction could afford to incentivize the deal for quick closure, as a means of preventing the less-knowledgeable party from learning more, fast enough to impact the price. I’ll offer this price, if you agree today. Otherwise, the price will go higher.

My father felt the price would be found via discussions based on value. Obviously we worked in quite different industries. Technology moved so fast, getting better/cheaper/faster while construction was old-skool, with large multi-year contracts, government regulation, and various forms of large scale collusion behind the scenes.

I recently read Bruce Schneier’s commentary on how the computer security industry suffers under a situation of consumer ignorance. I see mis-information as a core problem for the SEO industry. There is so much so-called SEO out there, mostly outdated, baseless, or downright wrong, that the accessible information is more wrong than right. A Google or Yahoo! search on SEO topics is ridiculous, for many reasons. Often accurate SEO information is considered trade secret by knowledge consultants, and thus is not very accessible. What appears in front of the inquisitive SEO consumer is mostly junk. This puts the prospective SEO client at a distinct disadvantage, and provides an opportunity for the contract-seeking “snake oil SEO salesman” to close a deal at a good profit, often without realistic accountability or other consumer safeguards in place. But, as the 2001 Nobel Prize winning economist George Akerlof showed in his famous paper “A Market for Lemons”, asymmetrical information does much more than that. It actual can destroy the market for true, quality SEO.

Akerlof analyzed the used car market, showing that the information disparity surrounding the value of a used car led to a collapse of the market as a used car market, creating instead a “market for lemons”. The used car salesman knew how good (or bad) a used car really was. The buyer could not determine that until after the car was purchased. Because of this “information asymmetry” in the used car market, used car salesmen could overprice “lemons” – the low value used cars that looked ok. Poor quality cars no longer priced as poor quality. Actually good used cars became too expensive for buyers to chance, as poor quality cars at middle-quality prices presented better perceived value and higher profits for salesmen. As non-selling good cars were removed from the market, masquerading “lemons” dominated, setting the tone for the used car market, and further blocking actually good used cars from appearing. In the end, the used car market becomes a market for lemons, not a used car market.

It seems SEO has the same problem. As “boiler-room” SEO firms cold-call companies and pitch ridiculously low prices for SEO contracts, based on old and incorrect SEO information readily accessible to consumers, high quality SEO firms start looking “too expensive”. Consumer research into SEO does not reveal better information, since that knowledge comprises a significant portion of the value SEO consulting, and is thus not freely published. The entire market for SEO services starts to become a market not for actual search engine optimization, but more a market for “snake oil SEO” than true SEO. The typical seeker of SEO services these days seems ready to sign a one year contract with little if any performance basis. I can only presume they are buying based on looks, flashy presentations, or perhaps on gut instinct after a personal interaction with the salesman. I suppose we can expect SEO firms to start hiring pretty women and smart dressing, friendly “SEOs” instead of the geeks that actually understand search engine optimization. For a service designed to achieve rankings in search results, that seems very very odd. SEO has a measurable outcomes. Unlike a used car, SEO is a service. Nobody has to sign an SEO contract that does not include a 3 or 6 months performance evaluation with hard metrics of success and a cancellation clause.

We SEOs can learn a lot from Akerlof’s paper, but that might not be enough to save the SEO market. I already see that tech-savvy seekers of SEO skip right past the fluff and ask for short term or no term engagements, performance metrics, and accountability. The price pressures are still an issue, though, because quality SEO services are difficult to find and costly to develop. Without the financial support of longer term contracts, SEO becomes classic consulting which is not very scalable until layered in a bureaucratic hierarchy reminiscent of the Price Waterhouse style of the eighties and nineties. That might not be better than where we are now, and probably supports the case for bringing SEO in-house. Once in-house, though, who will pay for the advanced training and research required to stay current and effective as an SEO?

It seems the key issue for SEO consultants will be bringing performance metrics out front a.s.a.p., to appease the interests of paying clients while satisfying the need for results-oriented pay for SEOs. Those who work on a performance basis probably know what I mean by that, and probably find it exciting (as I do). Unfortunately, it means more secret information outside of the view of the general public. Alas, isn’t that what true SEO has always been?

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April 17th, 2007 by john andrews

Blog Silence? What a Waste.

In my WordPress dashboard I saw a mention of “One Day Blog Silence”. I followed the link, and saw a page promoting a “day of blog silence” in honor of those touched by the Virginia Tech tragedy. What a waste. The blog world doesn’t need silence. The families and friends of those killed and injured don’t need a no-blog-post day. Our American society doesn’t need silence regarding this event, and the world doesn’t need silence around this event. If anything, we need more talk.

If you’re a blogger, why should you be “quiet” out of respect? You should be blogging.

Blog about the outrage that a young man would be so moved by the events of his world that he would arm himself and massacre dozens of his peers, and then himself.

Blog about your views on gun control – should we allow citizen arms, and if not, how do we defend ourselves? And if we do allow arms, how do we prevent acts of armed violence? Why is our own local police force arming itself with powerful crowd control weaponry, and since it is, what should be our rights to bear arms?

Blog about the prison system, which has grown into one of the most profitable government-industrial complexes in our society. Blog about how hundreds of thousands of low-level criminals are jailed each year, while the FBI virtually stopped prosecuting white collar criminals after 9-11 because field agents were pulled over to terrorism duty. Blog about how ex-convicts can’t vote until they pay off financial debts to society for all offenses, yet regular citizens can vote even while in bankruptcy court (deep in unpaid debts).

Blog about how our American society is driven by fear and fear mongering, to the point of excessive self-ensconced individualism. Blog about how that closed-door, protect myself individualism erodes confidence and fosters the kind of paranoia that fuels radical and blind religious and political fanaticism. Banning gay marriage to protect the American Family? How about stopping the assault on non-faith-based community, as a means of protecting the American family?

Blog about how a young man, desperate for whatever reason to take action to relieve himself of his emotionally painful personal predicament, sees no better option than assaulting a helpless community one bullet at a time. Blog about the way society, whether it was his father, his mother, his neighbors, the bullies at his school or the nasty clique that excluded him from social activities, taught him to respond with bullying aggression that includes bolting escape exits, targeting upper floors, and carrying multiple hand guns “execution style”.

Courage is a powerful and poorly understood character trait, but it is invariably courage that improves the world. Have some courage. Don’t stay silent. Speak up, and do your job.

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April 15th, 2007 by john andrews

Google Buys DoubleClick, Announces Penalties for Non-Google Advertising

In a one-two punch sending many web masters reeling, Google has announced it is buying dominant Internet advertising system DoubleClick for more than $3 billion dollars, and deploying new algorithms designed to penalize web sites that accept paid advertising outside of the Google advertising network. In light of this action by Internet search behemoth Google, a web master would have to be very foolish to accept paid advertising that did not contribute profit share to Google machine. The risk of losing value in the search rankings is simply too great.

The DoubleClick deal has some analysts puzzled, as the $3+ Billion dollar price seems very excessive given the reported sub-200 million dollar earnings booked by DoubleClick. But when coupled with the new rules banning sponsored links, reviews, and articles unless they are registered with Google first, this move makes sense. Google might be able to own all Internet advertising by effectively banning everything not included in the combined monster network of DoubleClick + AdSense. It seems that is what has begun.

Even Google-loving web masters are concerned because of the way these new rules were announced by Search Spam Team representative Matt Cutts. While Matt stated that there were “tons” of ways to report sponsored links, articles, and reviews so they wouldn’t earn Google’s wrath, he only named two of those ways. One of them was quite complex, requiring multiple layers of pages (some redirected with specialized computer code) to funnel traffic according to whether or not it followed sponsorship. It’s isn’t clear that many web masters are capable of implementing such sophisticated schemes. The second method mentioned by Matt Cutts included the use of a controversial HTML tag attribute introduced by Google without sanction from the HTML standards body known as the W3C. This places web masters in a professional predicament; do they adhere to professional standards, or bow to the Google rules instead? The new use of this attribute also seems to contradict Google’s own previous description of it’s intended use.

To put it mildly, web masters are confused and frightened by the new actions by Google. In many cases, Google controls as much as 95% of the traffic coming to web sites. Sweeping changes like these can destroy web-based businesses unable to decipher the new rules or get into compliance fast enough (if that is even possible). The danger may be greatest for business owners, however, who know even less about the technical details of web sites. Previously accepted practices like linking to other websites are now high-risk, as Google threatens to devalue sites that link out under sponsored arrangements like discounts, membership or even professional courtesy.

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John Andrews is a mobile web professional and competitive search engine optimzer (SEO). He's been quietly earning top rank for websites since 1997. About John




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