Those ads on the right are not amazon or Google ads. They are ShoppingAds, a new cost-per-click program from the folks who bring you ReviewMe and TextLinkAds and AuctionAds.

Click on “Ads by ShoppingAds” at the bottom of the ad strip,  to see what the program is about and consider signing up for your own evaluation.  or you could click here.

Note: I don’t intend to keep ads on this blog, but I was invited to the beta test and so here they are to distract you.

Hey John D., it’s not so hard to understand really.

First the disclaimer: I haven’t read John Dvorak for many, many years (since the 350 page per issue PC Magazine days). That said, I did come across this article of his and it is relevant to my current observations on Google and the press.

in “Web Site Entropy” Dvorak notes that his favorite websites have “evolved” into complicated messes that don’t serve his needs nearly as well as their former designs. He cites college sports teams switching from home-grown sites to platforms like CSTV, and wonders why colleges don’t make use of their computer science departments to build websites. A sample of his frustration:

…my local university football team’s site, UC Berkeley… At one time it was quite usable, and you could actually find what you were looking for on the site. Now it’s a slick, unnavigable mess. If you want to find player profiles, the scores from last year, or the coach’s bio, you can forget it. You can’t find crap anymore because the site has been outsourced to an operation owned by CBS TV called CSTV.com. Can I put this bluntly? As far as I’m concerned, the Cal CSTV Web site stinks.

When I read this I first thought “wow, Dvorak is getting OLD!” But then I was distracted by this:

Curiously, what I am looking for is often there, as I’ve found it using Google, but it’s usually buried quite deep. Even worse is the fact that I am finding more and more colleges using CSTV for their outsourced “official” site. It’s also apparent to me as a football fan that nobody doing this site actually likes football. At least, they do not like what we call football. And because of the sweet deal someone must have sold to these colleges, ALL of the colleges’ sports are consolidated into one miserable site.

You see, John? It’s not that hard to understand. You just need to read between the lines of your own prose.

The information you wanted is there on the site, but not apparent to the user, so the user (you) goes to Google and find it. Do you think that is sans consequences? Of course their are consequences, and they have been unfolding before our eyes for 5 years as Google has grown into a bijillion dollar monopoly. Bad site design may come out of bad decisions on how to accommodate growth (not everyone’s favorite summary data can appear on the front page of the site).But once bad design takes hold, users jump to Google, and search referrals pile up. If the home grown site isn’t of SEO quality, other web pages from other sites rank for those searches, and that search traffic goes elsewhere. So the business side of the web ownership decides they want a search friendly solution.

See the consequence of your impatience with the user interface of that website? I could hunt, or I could call Google. As for the reason why the site got to be bad in the first place, business is business and education is business. As an SEO, I almost never find SEO awareness among college students. They are all about AJAX and other acronyms unrelated to today’s commerce. They chose to NOT make money right now, but go to school instead. That is why the teams don’t have the college students develop their websites anymore. That is why they outsource to those “specialists” — those specialty platforms are well indexed in search engines, and “ready to be accountable” as publishing platforms.

Yes yes yes you are correct in pointing out that search traffic is not everything. I’m with you there, John. But business people make mistakes all the time, often at the expense of their customers. And competitive web technologists step in (often with SEO solutions) to satisfy those business people with one solution,while selling another to those aliented customers.

Getting back to your bewilderment regarding outsourcing:

The question on my mind is how any large university with a computer science department can let this happen in the first place. Developing a modern Web site should be a function of the student body, and especially the computer science department. At least I think so. How humiliating it is that the athletic department thinks so little of the computer science department at Berkeley as to outsource to CSTV.

As an SEO consultant I can tell you that the sales pitch from those “specialty website” people brings a new carrot that many administrators find irrestible. They note that the web site, which has historically been a cost center, could actually become a profit center when their content-and-ad-serving-platform is utilized. Sponsored ads and placements can actually bring in revenue (imagine that!). So the administrators toss out the fans for the chance to earn money… Again, what’s new there? Of course the dollars aren’t as expected, but the contracted deal allows the platform to optimize as needed to extract their share of the “profits”… ostensibly to recover development costs. Would you call that entropification?

What I do see as interesting about your rant, John, is that you recognized the potential for student involvement but didn’t suggest that the college students (from the marketing department, not CIS) jump on these opportunities and build out unofficial University team fan sites as entrepreneurial adventures. Unimpressed by slick sales pitches and aware of the hidden costs of giving away the farm, the B-school freshmen do indeed recognize the potential of social media and the ease of startup these days. Ten grand would get you a good start… and you won’t have to split those ad dollars with the middleman or pass your traffic logs (business data) through their filters. As for SEO, Google tells us what to do to earn search referrals. I can plainly see a few promising search startegies in the examples you noted, and I haven’t even tried. Of course such endeavors would disrupt the (business) plans of those university administrators… but as you say, they aren’t doing a very good job of it now, are they?

There is beauty in what Google is doing. By playing both sides of the transaction, they can encourage disruption, reward creativity, and simultaneously sympathize with the losers as their business models fall apart, offering them hope with pay per click. It’s ingenious. Smartest guys in the room? Enron had nothing on Google.

If I were Google, I would have been working hard for the past 6 months on something new, and it would now be “almost ready”.

In early spring of 2007, if I were Google I would have recognized the strength of search marketing in the world today, (SEM/SEO and especially SEO), and reflected. I would also have recognized the serious weaknesses in the SEM/SEO model right now, and likewise reflected. That activity would have hatched a plan. And the plan would have taken about 6 months to implement. At SMX I would have felt good about how SEM/SEO was getting more user-centric and supportive. I would have marveled at the growth of the search industry from the user side, as less-obnoxious “SEM”, and I would have felt good. My plan, which would have already been generating useful information as a research project by then, would be back-burnered for implementation. But in San Jose at SES in July, where the anti-Google edginess peaked and one-way, inflammatory communications seemed to be welcomed by the audience, I would have gotten pissed and thrown off my hesitations. No more Mr. Nice guy. The plan would go forward.

What sort of plan? Well, what sort of weakness exists in SEO today?

SEO is about optimizing a web business to garner free organic search referrals. It has also become about managing Google, as Google tries to manage commerce. SEO had a reputation as a way to “game the system” but now Google has a reputation for gaming that same system in a much bigger way. SEO is now a response to evil. But therein lies one weakness: SEO still has a bad reputation, and Google still has a good reputation. The plan has to capitalize on that before Google has a worse reputation.

SEO was formerly based on greed. More #1 rankings means more traffic and more profits. But the SEM/SEO industry is now built upon the “see a need, fill a need” philosphy. In the last few years, Google flip-flopped from “don’t be evil” to “don’t be too evil”, and alienated a ton of web publishers. Now there is an almost universally recognized need for search optimization services not for greed, but for survival. Everyone needs SEO today, and most business people know it. It’s not optional, but is required. As long as it is obvious that people need SEO to survive, SEO will prosper. And therein lies a weakness.

And so we have unearthed the clues which define The Plan:

• Increase the RISK asociated with SEO. Highlight the evil side of SEO in a very prominant way, to win over the audience on the issue of “SEO is gaming the system, bad for everyone, and a dirty, slimy, parasitic endeavor”. Show SEO as evil. Define good SEO (enabling search inclusion, promoting relevant text, effective linking etc) as not SEO but good webmastering, leaving only the ugly stuff to define SEO (”keyword stuffing”, “sneaky redirects”, “off-topic linking”, “paid links”). Use the SEM community to help in that regard, since they are Business Partners (thru PPC) and thus beholden. They will help — they have no other option. Yes I know this has been done, but I’m thinking it now needs to be done much more thoroughly, clearly, and with conviction.
• Show the world that they don’t need SEO. Leak the existence of high-profile web sites which do well in search, but which do not look “optimized”. Make sure some crazy URL structures are well indexed. Make sure a high-profile selection of pages are parsed perfectly, so core relevance is emphasized and rewarded with search traffic despite overly-templatic page layout or bad information architecture. This might take manual assistance, but nobody cares about that anymore. Show the people that SEO is not necessary, so they can see only the risks. Ignore the fact that SEO is about competition, because people are too distracted to notice that. They want their entitlements, so give them entitlements so they don’t need SEO.
• Lower the cost of PPC for entry level and small markets. This is more easily done than imagined, as there are simply so many hooks available to Google for “managing” the total costs (thank you QualityScores). Show success stories of small merchants earning profits without the overhead of SEO. Again, the SEM army will be happy to help with this, since they understand how easly the flock can be managed once so engaged. Free targeted traffic is what they want. They will accept low-cost targeted traffic (they did it before). Yes, it’s a lot like the Long Tail carrot, and the “but you can rule the world of rainbow sandals!” approach to search marketing, but it will work if you make them feel relief from the stresses of competing with the BigBoys of eTailing.

I agree most of this is not new, and pre-exists in smaller, uncoordinated doses. But I’m waiting for The Plan to be implemented very soon in a coordinated fashion, at a level not seen before. Maybe after the upcoming disappointing end-November online sales figures are in to the web mechants, and they see just how Google and the BigBoys of eTailing now have it, at their expense. Just before those masses of small businesses can throw their hands up and say “I need a darker hat”, will Google implement The Plan? Was the earlier-than-expected Page Rank demotion part of ThePlan? Will Google say “we nailed a bunch of evil SEO spammers, threw their customers and anyone who looked like them out of the index, and are now rewarding the loyal Flock with a new, lower-cost targeted traffic. Oh, and you need to become a Google Business Partner… ”

If I were Google, that’s what I would do. And I would do it during the next 90 days.

And if I were a merchant/publisher, competing with Google and the Big Boys, I would fully engage smart SEO right now. Let the Flock get scared and sign on with Google. Let the script kiddies trade links and play their SEO tricks, setting themselves up as scapegoats for the Google slaughter. In the end, those who compete will win, and real SEO is about competition for rankings in Google’s pages, playing Google’s game. Pick any analogy you want for SEO, but the bottom line is you must be in the game if you want a chance to win. To be in the Google game, you must engage smart SEO.

*** This article is getting voted up at Sphinn…. if you liked it, add your vote, too.

I have some middle-aged Korean friends. The kind of Koreans that wear sharply-tailored, brass-button suits and traditional Burberry trench coats. They appreciate fashion at a level that eschews “common” trends like Louis Vuitton, in favor of hand-made unique accessories only recognized as fashionable by other, similarly-tasted and similarly traveled peers. They are extremely nationalistic, passionately despise what they collectively dislike, and passionately support what they collectively like. They are generally moderately smart, always decisive, and yet always inclusive of the opinions of their community peers. One could say they argue as friends, and act on consensus. They are generally a lot of fun to be around, but since I am not Korean myself, I have to be careful I don’t make any predictions.

One they taught me is that America will eventually become like Korea in one particular aspect: the all-or-nothing approach to challenge.

When a Korean is elected President, he is elected by a landslide vote. When a Korean President comes to the end of his term, he is disgraced and “thrown out” (or so I am told). In this way, Koreans nurture the nationalism that has kept their ethnic race alive despite historical domination by seemingly every nearby race (the Japanese, the Chinese, etc). All or nothing. No “red states” and “blue states” after a contentious election. Everybody is a winner. It seems there is also an inclination towards corruption at the end of a term, when that certainty of disgrace looms overhead, but that might just be my outsider bias ;-)

When one of my Korean friends sees another not seen in a while, they discuss whether they are currently “up or down”. This is reference to gambling, where at any moment you may be “up” (winning) or “down” (running a loss). In business, these people commit 100% and they either succeed handsomely, or fail miserably. They are rich, or poor, and neither is a permanent condition, although the former is much easier to maintain than the latter (or so I am told). Of course I generalize, and of course I am no scholar of Korean culture. But this is what I see.

Now “social media” is taking over on the web. Is Social Media the Koreanization of web traffic? Will waves of trendy “me too” traffic so overpower the individual, that Social Media is the all-or-nothing of web traffic? Who cares what the individual thinks, if the masses are flocking over there?

Digg and Slashdot have “effects”, where the sudden onslaught of referral traffic crashes web servers. Handle the traffic (”all”) or crash under the load (”none”). Viral media bursts onto the scene once a tipping point has been reached, and then becomes “old”. If it’s fresh and new, you’re “up”. If it’s “old news” you’re “down”. Headlines like “man bits dog” don’t do a fraction of the traffic that headlines like “angry man rips dog apart with his teeth” get these days. Hyperbole is the new normal. Extreme is the new black. Is search old news…? Does anyone who matters actually search anymore?

SEO has traditionally been about building momentum for free organic search referral traffic over time. Dividends… SEO pays dividends. In this “lottery” culture of all-or-nothing, where “Social Media” is the source of traffic for web sites, who cares about dividends? “You have to be in it to win it“, we are told. If it is respectable to be “up” in your high-fashion clothes and being “down” is accepted as a necessary but temporary condition to be suffered between periods of “up-ness”, who actually wants to be in the middle? Why work to earn hundreds or free search referrals per day, when I can keep shooting for tens of thousands at a time? On average, a few Diggs a year is more than a steady stream of organic search referrals. Or is it?

That’s the key. As we move towards irrational exuberance regarding Social Media, keep an eye on the metrics. It’s just traffic, folks. Same old traffic we’ve always had… it’s either quality traffic or not; profitable or not. The “up” and “down” game might be entertaining, but it’s not a sustainable lifestyle (check the quality of life, divorce, disease, and stability measures of the Korean society if you have time). Make your trade offs as you like, but don’t forget to mind your business - track the costs and the credits, and see if your social media is indeed worth the efforts and volatility risks.

Sometimes after a few glasses of soju with my Korean associates, I will hear them speak of “too much independence” over here in America’s culture. “Too much freedom“, they say. And then I ask them to explain to me why, when they are at their most “up” and able to buy whatever they desire, they seek only the most unique, hand-made products available, even though virtually no one can recognize them for their value? Why, in fact, is their own ultimate expression of their achievement an expression of independence? Of freedom to buck the expectations of their Louis Vuittton-buying peers?

People will always search. Bet on it.

When a blog gets “popular”, the blogger is faced with a quandary. Continue to do what has made the blog popular, or recognize that there is now audience expectation, and accommodate it? The audience is people, and people live by politics. If you don’t accommodate the people, you can find yourself on the wrong side of a pitchfork (or tied to a stake). If you do go “politically correct”, won’t the critics sway that mob against you eventually? People is politics. No matter how much you might wish it weren’t so, politics will play an active role in any successful business or industry as it evolves.

Search is no exception. Google seemed to eschew politics for years as it grew into one of the world’s most powerful corporations. Google referenced “the algorithm” as the source of every nuance, skew, prejudice, or bias evident in the search results. Have a political complaint? Concerned about search results which seem to infer something about Judaism, abortion, creationism, white supremacy, or even left-handedness? Don’t blame Google. Blame the algorithm, and recognize that Google is trying really really hard to make it better, every single day. “Thanks for the highlight of the problem“, Google would say in response to criticism. “This helps us to make the algorithm even better!” It worked. The defenders of Google escorted Google all the way to the bank, heralding the “don’t be evil” company as a leader and innovator worthy of the massive profits it had earned.

Of course what Google was really doing was playing politics. Better than most, I might add. Sans the lobbyists and open debates, Google was working the people. Price controls? No, Google doesn’t control prices. Google measures quality, and adjusts pricing based on quality scores. People believed it, and Google controlled pricing. And now Google is controlling Internet commerce using the new Google Politics, while we all watch. Google gets hugely richer and more powerful every single day, as we watch and (if you are an SEO, you play along).

But one emerging area that might test the waters of this new political Google is domaining. Domainers control a very large amount of Internet traffic. Domainers are keen on developing that traffic, to better serve it commercially, while earning a share of the commercial profits associated with serving that market. Just as Google delivered search and then monetized it via commercialization of the traffic flowing through search, domainers have published on domains (parked pages) and are now seeking to monetize the traffic flowing through those domains. The problem is, in the current PPC marketplace, Google is managing that traffic, too.

As a search consultant, I work with companies to help them earn more search referrals (targeted traffic) from Google. I am very confident in my knowledge of what helps Google to give you free targeted traffic, and my ability to execute. I see the tangible results of my efforts every day in the traffic logs. More traffic, more conversions, and more rewards from Google for meeting the needs of the Internet searcher. But when I look at this emerging field of domain development, as defined by domainers, I see a political storm developing.

In Miami I was lucky to meet Jay Chapman of Digimedia. Jay and his company have published a site you won’t find in Google’s index: DiamondsDirect.com. If you look at it from an SEO perspective, you might classify it as a thin affiliate site or a shopping aggregator. We SEO people would expect that site to suffer from poor quality scores in Google, ranking off the first page for sure, and in need of substantial SEO work to go after the long tail terms represented by its content. We would have to do some work to keep it out of the supplemental index, because it uses a popular data feed. Since Google is not yet selling diamond jewelry, I would not expect it to be completely absent from the Google index, just off the first pages. I’m not sure how much of an arbitrage play it is, but I’m assuming that’s not a primary problem.

From a domainer perspective, DiamondsDirect.com is a rich parked page. It has supremely relevant content, quality imagery, and several layers of content behind navigation that engages the visitor and genuinely guides the visitor to appropriate jewelry choices ultimately sold up by affiliated sites. To the domainer, there is no reason at all that DiamondsDirect.com should no rank #1 for its own name “diamondsdirect”, if not for many other very closely related searches. But it doesn’t. It’s banned from Google (or at least completely absent).

Politically, where is the line that separates worthy vs. unworthy sites? The quality score approach enabled Google to effectively control who gets and doesn’t get search traffic for the money terms, without openly assigning value. But what about these rich parked pages? What happens as they get richer and richer? Certainly this site is already better than most of the “made for adsense” sites out there. We expect those to be supressed below page 10 or so, but dropped completely? here’s one that still exists out there, and ranks #1 for it’s own name. And yes, it ranks for its content as well. (if it goes away after I publish this, it was www.nr59.org).

I would not have mentioned a specific site here except that Frank Schilling already highlighted Digimedia’s rich parked pages on the Seven Mile blog a few days ago. Frank suggests that this is the future of the web, as more and more of the millions of parked pages develop into useful, commerce-driving “billboards” on the web. I can’t disagree, although I have my reservations. This is a political battle, and Google is very very good at politics. Those who know how I work as an SEO consultant know that I would never publicly call my pages “parked pages”, never have them on parked page domain services, and never highlight them as projects seeking search traffic. I know Google better than that, and I’m not in the business of advocating for change but rather quietly integrating with the status-quo to earn profits from free search referral traffic. If you heard my “speech” at T.R.A.F.F.I.C. Miami referencing “Google the grumpy old man”, you know what I mean. But unlike regular web publishers, domainers have leverage. Google is earning a large percentage of its PPC profits from parked pages. Google is getting a large percentage of its traffic from parked pages.

How will domainers use their leverage? How will Google respond? This is politics, folks, and it should be exciting to watch. In the mean time, duck and cover, and if you want search traffic, I’d suggest a solid stealth SEO strategy.

If you are in SEO/SEM then you probably understand the historic value of a domain name from a marketing perspective. You are also probably increasingly understanding the market value of generic domains, and perhaps developed domains. But do you recognize just how fast this market is advancing?

Adam Strong over at DomainNameNews just published the Moniker silent auction results, covering the domains that were not sold or not brought to the bay at T.R.A.F.F.I.C. conference in Miami. Of course it includes the BigFamousOnes like cowboys.com for $360k, but SEO/SEM practitioners should take note of the tail of that list. One hundred and eighty nine (189) domains sold for less than $700. That’s less than the consulting fee for chasing and acquiring a domain on behalf of a client. The way Moniker runs things, many of those domains were prepared in advance for easy transfer at Moniker. One hundred and fourteen (114) of them went for less than $400. As I suggested in Paying for Privilege, the rights to a domain represent a unique privilege to publish under a brand on the Internet.

As I wrote some time ago in “Domain after market wipes out domain name consultants” (click the johnon.com listing), these auction lists and the availability “for sale” lists represent the new pool of domain names available to SEO/SEM consultants. Sure it sometimes still pays to hit the registrars with your creative brainstorming, but I rarely find that time productive anymore (who else remembers the “bug reaper dot com” commercial?).

Side note of Interest: When the Dallas Cowboys allegedly balked at actually paying their own $275k winning bid on cowboys.com after the live auction, my friend and search colleague Todd Mintz posted a note to marketing site Sphinn. I commented as follows:

This is history in the making. Not only is a test of the value of .com domains in the aftermarket, but it is a stage for all sorts of precedent in the business world where domains are concerned. If Dallas screwed up this will alter corporate behavior in the domain aftermarket.

Dallas dropped the ball at what would have been amortized as marketing expense at roughly $20k per year for 15 years, after which it would be free and probably a significant contributor to asset value. Yesterday it was $275k, today it sold for $360k, to domain investors.

Today “cowboys” is synonymous with the Dallas Cowboys. What will it mean tomorrow if it is developed online for a country western affinity theme or a Pixar animated series or a perhaps a gay affinity site? The Dallas Cowboys own “cowboys” as a brand and just missed their first shot at owning it online. I wonder how expensive that education is…

In the DomainNameNews discussion someone calling hirself “Innocent Bystander” challenged the domainers, suggesting there was no good rationalization for such a high price tag. Oops… that person was posting from an IP block owned by the Dallas Cowboys! My take is there was sincere marketing discussion over there, and they don’t get it so they made a decision to back out of their deal. We can all call it silly and dumb but we also can see the way that marketing unit is behaving… and perhaps learning as they go. Will heads roll? I especially like this follow-up comment from “MrSpartan”

“It is bad press for an organization who is based on winning and excellence to back publically back out of a winning auction bid because they did not understand the rules of the business they were conducting AND lose out to another bidder who bids more than they could have paid a day earlier. They look foolish and Stupid.”

Following Microsoft’s Health Vault, Google has announced that the Google Health Initiative at the Web Summit. As allof us involved with search already know, Google reminds us:

Google is already the starting point for a large majority of the health-related searches on the Web

Now we also hear that Googleis moving into local health commerce with “find a doctor” features:

Google has developed a prototype online platform for its health offering that incorporates personal medical records, health care-related search features, diet and exercise regimens, a localized “find a doctor” application, and other elements, Mayer confirmed. The company has shown the prototype to unspecified partners and is having both Google employees and “trusted testers” beta-test the system.

Google’s Mayer says that Google will help make sure you see even less of your doctor, as Google efficiencies help reduce the number of minutes a doctor has to provide to each patient:

“The goal for a lot of doctors is how many patients can they see in a day,” Mayer said. “That means their minutes per patient has got to go down, and the less time they have to spend finding and going over patient records the better. Ultimately we will design a product that’s useful for users, and also helps doctors do their job more quickly and more efficiently.”

Contrast this report to Microsoft’s Health Vault reporting, which was all about medical records, databases, and privacy. Where Microsoft announced the Health Vault to the world of medical consumers,it seems Google is going after industry support. No surprise there, eh?

Resources:

• http://www.searchenginejournal.com/google-health-coming-in-spring-2008/5852/
• http://blogs.wsj.com/health/2007/10/04/microsoft-google-aetna/
• http://blogs.wsj.com/health/2007/08/14/google-microsoft-health-care-giants/

The “honeymoon” is the initial period during which much is forgiven. The situation is new, overreaction is dangerous, and a decision was already made to “try it and see how it goes“. You aren’t usually thrust into a honeymoon — you decide to go there: you manage the risk. The web, from an SEO perspective, has been one big honeymoon. Is the honeymoon almost over?

There are many indications that the honeymoon for webmarketers has been fabulous but is finite, and it may be time to start planning the return to reality. Competition is heating up, and as I suggested in “Here Come The Domainers“, there is plenty of room topside for more competition. Post-deregulation domain prices are correcting, as the secondary market takes hold. SEO services are still hawked as “task packages” even though SEO is a process, but buyers are getting smarter. We have one search engine, and that entity has taken over almost half of the online advertising market it helped create. As Google exerts some of that power, we’re going to enjoy fewer freedoms.

One of the big areas to watch is the web development space. Most immediately, I’m seeing domainers stepping into development, and they have a lot to learn. Web development has advanced well beyond the HTML and CSS of domainer world, with frameworks and platforms evolving at breakneck speed behind the scenes. As is the case in SEO, what you read on the web does not represent state of the art or even close. Open source CMSs may look good, but they represent nothing more than a framework to adopt, often without adequate best-practice nor robust community support. Popular support is not the same as robust support. If you don’t believe me, ask how many opensource CMS adopters have read the roadmaps for the apps they adopted. Ask how many of those roadmaps acknowledge a “complete re-write” is in the near future. Too many. Can you afford to adopt a framework that is scheduled for a complete rewrite? Think of the developers… are they concerned with the current release or even the nightlies, or are they focused on the next great re-write?

I doubt very much the venture and private equity groups forming around domain portfolios are ready to swallow the salaries demanded by the capable PHP, database, and web app dev people (if they could even get heir attention). Those of us involved in web technologies have encountered those problems for years now. A hundred grand doesn’t attract who you need any more. Do domainers have the stomach to carry high-salaried technologists who are more capable of chasing the same opportunities as a technologist that they are chasing as a business? Equity is not interesting to most of the really capable people, and when equity does motivate, I find the guy evaluating the equity opportunity knows more about the web and web development than the founders, their investors, or the leads on the venture. Honestly, they are not looking so much at the equity offer, but the likelihood of their taking over the entire project or a significant portion down the road due to their virtual control over it. That does happen, just as it happens with the IP lawyers and financiers. To really succeed on the web today you need more than youthful passion and obligation-free creativity. You need wisdom, and like the really good diamonds on display in the jewelry store, wisdom’s price tag “ask for price”.

A long time ago when the web started guys like me questioned everything. It was stupid to do this, stupid to rely on that, stupid to trust this or that. But the web was in the honeymoon period, and we simply had to trust. Forget about 20 years of software business experience, we had to make progress. Client server taught us very little, because we had to have faith in the web. Now, as the honeymoon shows its age, the risks are showing more clearly. We’re seeing javascript loaded across domains, slowing down page loads sometimes at the cost of visitors, and skewing stats. We’re seeing services unable to keep up, yet still relatively unaccountable to their customers. Just yesterday an obscure blogger Earlier this month Aaron Wall wrote this:

A few weeks back I made a post about the book being a dying format, and in that post I have a Google book snippet. Within a week that snippet was broken. I had a Google CPA ad integrated into one of my major websites and the ad went away, breaking 10% of a large site and making it look like spam. Even some of the services that are not broke will likely be drastically different in a few years. Google maps is really open because they need marketshare, but after they become the clear market leader will they stay fairly open? How long until we have ads in everything? A good webmaster service that would be exceptionally useful is something that scours websites and looks for broken stuff.

Trusting Google for part of your page content and user experience? What does Google care if it fails to perform? Google maps has one of the most risky terms of service of any out there, yet young technologists forged ahead developing apps around it. They had to. But not to secure a defensible business. They did it to secure their tech positions. Now what will they do? Pitch you on developing Google maps applications using their leet skills? Are you prepared to evaluate and manage the risk associated with that Google Terms of Service which allows Google to shut you down at any time, for any reason, with no warning? the recent acquisiton of Navtech by Nokia should shake some boots. What happens to Google maps now? Or perhaps more clairvoyantly, when will Google acquire Nokia to secure navteq *and* the Gphone? Maybe it doesn’t matter for your gardening website, but if you’re Zillow, or an online yellow pages, this is quite significant.

There are plenty of signs. If you were registering domains back when they were $150 each you probably remember how stupid it seemed to pick the “authentication via email” option at the registrar. You were warned in great detail that email-based-auth was not secure, very risky, and should not be selected. Yet, what other choice did we have? It was far to difficult to manage public/private key encryption back then, and other alternatives we risky for other reasons. So in the end, virtually everyone accepted email-based-auth as the gold standard for domain registrations. And now? Because the whole system is based on an insecure protocol (email based authentication), criminals are stealing domains. The honeymoon that granted us freedom to actually choose a known-to-be-insecure option simply out of convenience, is coming to a close.
I think the honeymoon is almost over, but I also think we’re in for a wave of profit taking by the web technology people. Investors, builders, web real estate developers, and even consumers will yield to the technologists as they advance the underlying web infrastructure beyond even the rather complex levels it is at now, to levels well out of reach of most current web publishers. Innovation will get more and more expensive, and as the rest follow each other under Google’s umbrella, that innovation will yield more and more significant dividends.

Call it a bubble or call it a gold rush or a wave or trend, but the risk is increasing with that growth. Remember the old story about the guy who moved to San Francisco in 1849 to sell shovels? As we notice the new web business model evolving around a few core infrastructure players, and everyone shouts “ignore the little man behind the curtain“, who dares be Dorothy?

Warning: Sometimes a blog post is less an essay than stream of consciousness… and some people may get headaches from wading through such a post (see the first comment - sorry!). The rest of you have been warned. By the way, according to the wiki, “stream of consciousness” was first defined by William James, the brother of Henry James, my favorite author during my college days. William James grew up in NYC. I grew up 6 miles or so outside NYC. William James lived in the Astor house… and my family has some connections to the Astors. Funny that, eh?

If you are in SEO or SEM, a domainer or an advertiser or a big brand, no argument the future looks bright, but is is also tumultuous. Who controls the commercial future more, the domainers, the marketers, the market (users) or the search engines like Google?

The brands are the ones who spend the most on advertising, and those same brands are the ones who will eventually recognize that perfect-match domains are worth $200,000 or more. The budget-minded advertisers are buying traffic more than branding, which they can value with metrics and the buying of which they can adjust practically in real time. Two very different “markets” for the same PPC spend, and look at how they are currently bidding against each other. That can’t last (?) nor can the practically real-time management of that spend (made possible by the benevolence of the search engine/ppc provider). That can’t last either (?)

The SEO and SEM move the market, which does whatever it has been moved to do (direct traffic, search traffic, supportive cooperative promotion, etc). The SEM uses tools like PPC, while the SEO approaches the issue from a Judo-like perspective, influencing the search engine to influence the users for them. Of course they cross-over. They have to cross over.

What about domainers? They own the opportunity that exists outside of the search-controlled traffic, so obviously the future of branding involves domainers. Domainers feed a little off of search, and a little more off of SEM (SEM highlights the value of the perfect match domain, and promotions drive type in traffic to some extent). But aside from investment, the biggest influence they seem to have right now is in the traffic arena. They funnel a huge amount of advertising traffic. At the ad network’s discretion.

So in the end, who is in control? What’s the end game look like?

I think domainers recognize that they wield less influence as domainers than they do as publishers. Hence the move away from parked pages to a focus on development, which is fueled by many other factors (many of which are indirectly fueled by the same core issues of domains as advertising venues). SEM in my view has always been a tactical job, at the whim of advertising networks. SEM provides the man power and tools to utilize the ad networks efficiently, and manage the market in ways complimentary to that deployment of the advertising networks. No ad networks and SEM is “social media” and squarely in the realm of Public Relations and Advertising.

More complex tools and more need for ad networks means increasing sophistication of SEM (and increasing value added by SEM practitioners). And SEO? It’s all about search. As long as search engines are free and drive traffic, SEO will rule as much as that search-driven traffic rules. If you don’t need search referrals, you don’t need SEO.

It seems the user is in charge of the end game, no?

If users like search, SEO and SEM rule and we can expect some big changes in the way brands are competing with arbiters and others buying traffic from search engines. Domainers reap the rewards of their investments as brands buy domains, but not much reward from traffic except at the discretion of the ad networks. I doubt browser makers will continue to permit natural (type-in) traffic to find its way to the generic domains like it does now. If domainers build their own ad networks, they play traffic cop and optimize. If there’s enough traffic, will we see DNO’s (domain network optimizers) shaping the traffic funnels for optimal profits? Sure we will. The persuasion marketing people will be all over that.

If users find domains to be better than search, which would probably require a substantial adoption of good, generic and perfect-match domain names (”brands”), the publishers win the game. If YourFavoriteYellowPages became the perfect pseudo-search solution to satisfying Internet users involved in commercial transactions, who needs a search engine? Who needs more than ONE perfectly branded domain? If Google went all-paid, and users were happy, then SEO goes away, SEM becomes Advertising and PR, and domains are either everything (the brand) or a small piece (listed in the directory as a destination).

And when that happens, we shall see a renewed interest in FREE SEARCH, as people get tired of reading what MyFavoriteYellowPages says or they get tired of the way the Domain Network Optimizers keep funneling them to FriendFinder or ClassMates.com or other BigBrands. And the reason the search experience makes them happy? Because through FREE search, they find www.johnon.com and all the other “publications” that are new, fresh, interesting, or otherwise “refreshing”. When that happens, I suppose I’ll put ads onto johnon.com to try and make some pocket money.

Huh. The more things change, the more things stay the same.

I’m sitting in the Moniker/TRAFFIC Domain Live Auction. Right now Mucho.com is on the block…. $13,000…. $16,000…. $18,000…. all the way up it goes. Now $30k, once, twice… now $37,500 and the auctioneer makes a joke. Where’s Alf? He’d like this one, but maybe not at the $47.5k it’s at already. Did he just say $52,500? Once, twice, third and final call, SOLD at $50,000.

Yes that’s $50,000 for a domain name. For this one I can see the value. Mucho.com is so brandable in Latin American markets. The growth of the Hispanic markets here in the US alone is adequate to support Mucho.com as a US business. Surely one could build a business on Mucho.com and recover that domain cost in a reasonable time frame, and the business would still have the domain in possession as a (probably appreciating) asset. A bargain at $50k? Not really, because there is significant risk in the market at this early stage, which needs to be accommodated. But I’m pretty sure one day I’ll look back and say “Yes, Mucho.com was a bargain at $50k. If only I had bought it…”

MaineLobsters.com is on the block. $20k, now $40,000, now $45,000 and SOLD for $45,000. Another bargain?

The buyer paid for the domain name, but I think I understand it to really be paying for a privilege. I am reminded of the day long ago that I “bought” a GetOutOfJailFREE card from my older brother Glenn during a monopoly game. He had gotten it for free as he rolled through “chance”, and held it as an asset on his side of the board. I had “chanced” several times without getting a getoutOfJailFREE card myself, and now I was locked up for some sort of Monopoly violation. My 8 year old brain didn’t quite understand the violation that landed me in jail, but I understood I was losing turns in jail. And that he had that card… the privilege card. With that card, I could get out of jail. But I didn’t have the card. But I had cash.

So he sold me the privilege to get out of jail for $400. Sweet deal for him… $0 to $400 in a half hour of Monopoly. But I was able to buy privilege for cash, where I had no such privilege otherwise. No need for a lawyer, an eloquent tongue, or a missed turn, I was out of jail for a measly four hundred bucks.

Public.com is on the block… nobody wants it for $50k. Here’s cab.mobi at $10k, $12k, $15, $17.5k, nobody wants it for $20k… so it is SOLD for $17.5k.

Domain investors understand that only one entity can retain the privilege to publish on a domain name at any given time, and they invest cash into the system in exchange for the rights to that privilege. Cash from other productivity sources. Cash which props up the Internet industry, and fuels activities like domain development, which in turn fuels the Internet economy. In exchange for that investment, They reap the rewards of domain appreciation. My brother realized an infinite appreciation of value of his GetOutOfJailFREE card, because he got it for $0 and sold it for $400. Some domainers buy at $7 and sell for $15,000 a few years later. Nice return if you can get it. Insight into the Internet industry and ecommerce plus investment plus risk assumption equals capital gains. That’s how it works, right?

As the secondary domain market takes shape, we see the investments of cash, sweat, and brains that are fueling the Internet portion of the world’s economy. If you ever wonder why some people are “allowed” to have domains they aren’t using, I suggest you take a close look at how things really work. Once you gain some insight, I guarantee not only will you understand why it works the way it does, but I bet you’ll start buying domains for yourself.