Why You Shouldn’t Follow The Herd

It’s been a while since my last post.  I’ve been very busy with a combination of work and travel, but things should slow down for a while now and I’ll have more time to post more frequently again.  I picked up a Time magazine in an airport a few days ago, with a few interesting interviews.  One was with Apple’s new CEO, Tim Cook.  In it he said:

I’ve never thought going the way of the herd was a particularly good strategy.  You can be assured to be at best middle of the pack if you do that.  And that’s at best.

Outstanding advice.  It’s advice that all of us should keep in mind.  And it applies to both business and life.

I’ve been pretty good about not following the herd.  But when I started working online back in 2005, knowing very little about making websites, selling online, and building traffic, I initially copied what everyone else was doing.  It was a costly mistake, and I quickly learned my lesson.  I started putting it this way: Just because everyone else is doing something doesn’t mean it’s worth doing.  That may be obvious to most people reading this blog…in life…but it’s sometimes harder to see in business.  It’s tempting to think that if the competition has been doing something for months or years, it must be working.  However that’s not always the case, strange as it may be.

Burning Money

When I first started my e-commerce site, like every site when it’s new, I had no traffic.  SEO was going to take some time, but I needed to make money.  So I went to PPC.  I looked at the terms my competitors were bidding on…the terms that nearly all of them were bidding on…and figured those must be the good terms.  So I chose those terms and wrote similar ads.  And I started losing money.

It was near the busiest time of the year for my industry, so I figured it’s got to pick up.  The fact that I was spending more than I was making with PPC (on a credit card of course), was going to reverse itself.  Otherwise, why would everyone else who has been around for years be doing it?  So I kept it up.  As traffic picked up, my losses started increasing too.  I was spending near $2,000/day on PPC.  Sometimes I’d make about that much in pre-PPC profits…and break even.  But most days I’d loose a couple hundred dollars.  I just kept thinking…everyone else is doing it…these visitors are going to come back and buy.  It will work!

But it didn’t.  At the end of my first busy season I had lost $10,000.  And that was a lot of money to me.  Soon after I found out one of our competitors, a wholesaler who decided to go online and sell retail, went out of business because they had outsourced their PPC management and the company drove them into the ground.

Just because everyone else was doing it didn’t mean it was a good thing.  In the last 8 years I’ve adjusted my PPC campaign so it is profitable.  But I don’t bid on the same terms most of my competition still bids on.  Occasionally I do give them a go again, just to make sure I’m not missing something.  And every time I try it, I lose money on those terms.  Yet, my competition is still doing it month after month, year after year.

Free Shipping

Free shipping is another great example in my niche.  Everyone offers it.  A number of people have told us we need to be offering it.  But it’s a losing proposition.  I know, because I’ve tested it several times.  Free shipping increases the number of orders we receive by a little bit.  But the increase in orders is more than offset by the decrease in profits due to the cost of shipping.  I’ve tried adding average shipping costs to the price of products…and that just decreases orders due to the higher prices.

So many people think free shipping is a necessity.  But a customer first sees the price of a product.  In my experience, if you’ve got the better price (since you don’t have to add shipping to the cost of an item) you’re going to get more sales than if you had a higher price + free shipping.

It may be different in different niches and for different product types.  But the point is, you should never just run with the herd.  You should at least test what you’re doing to make sure it works for you.

Get Away From The Herd

Tim Cook said the best you can do if you run with the herd is to end up in the middle of the pack.  If there’s an existing herd before you get in the game, then you’re not the leader…by default.  If you don’t end up running behind, eating a combination of dust and crumbs, you’ll likely end up getting trampled, or spend half your time fighting in a crowded, unpleasant place.

The key is to get away from the herd.  Blaze your own path.  Do something different.  If it’s valuable and useful to enough people, and you do a good job promoting it, your chances are far higher than attempting to run with the herd.

Markets Are Brutal

My degree is in marketing, but I took a number of economics courses in college as part of the curriculum. We were taught that free markets are characterized by level playing fields, equal opportunity, and that people make rational choices based on their own best interest. Even then, I wondered if economists had ever actually run a business, participated in the free market, or associated with real human beings. Now that I’ve been running businesses of my own for the last 15 years, I know that most have not.

There’s one thing you need to know about markets, above all else, if you’re going to start a business (online or off): markets are brutal. Free markets aren’t characterized by level playing fields or equal opportunity. They’re characterized by survival of the fittest. In the free market, advantage almost always goes to those with the most money and power. There is opportunity for all, and ideas do matter. But it’s very heavily skewed in favor of entrenched players. For the little guy, an uphill battle is often fought against the big guy running downhill.

Markets vs. Government

I was having an email conversation with someone who said the choice between Obama and Romney is a choice based on one’s faith in either government or the market. He said more or less, if you’ve got more faith in government, Obama is your man. If you’ve got more faith in the free market, Romney is your man.

I don’t have faith in anything, much less government or the free market. But I do know that markets don’t care. Markets don’t care if a kid’s parents don’t have enough money to buy him an education. Markets don’t care if you get sick and don’t have money or insurance. And they don’t care if you were born in a poor, uneducated family. In the survival-of-the-fittest nature of markets, if you’re not born in the right family, right place, and right time, the odds are against you. Markets don’t give a shit.

In the free market, money and power rule. Those with the most money and power control the game and how it’s played. At least in theory, in a democratic society, government is controlled equally by all people, regardless of money or power. One person, one vote. Of course that’s not exactly how it works in reality. Those with money and power buy control of government, too. But governments are different. Governments do care. They do provide education (poor as it often may be) that the markets will not…for those with little to no money. They do provide health care and food for those where markets would not. And so on.

The free market is brutally competitive. People and companies will step on you, steel your ideas, and rip you off. If you list your products for sale on Amazon for example, they’ll use your data to see what’s selling, go direct to the source and sell as your competitor, then undercut your prices and sell at a loss just to drive you out of business. And when you’re gone, they’ll bring the prices right back up to where you were selling.

I’ve got a GoPro Camera and love it. What a great idea. The other day I went to an electronics store and saw two knock offs that looked exactly the same other than having one button in a different place and a different brand name. The free market doesn’t give a shit.

Only a person who has never actually participated in the market would want society to be governed by market forces. Survival of the fittest is anarchy.

David vs. Goliath

There is a way for small players to win in a market often dominated by big brands. The tagline for this site, “nibble your way to the top”, hints at it. Small players are more mobile, can usually move quicker, and adapt quicker. Small players can keep their expenses down and minimize risk in a way that big players can’t. With low expenses and high flexibility, we can move from one thing to the next as doors open and close around us. But most people won’t do this. Most small businesses will fail quickly.

Sun Tzu says you need to know your enemy and yourself, and you need to know the terrain. The playing field isn’t level. It’s massively slanted. But there are some paths that aren’t blocked by the big guys, and those are the paths you need to find. It’s easier to run past Goliath and let some other David fight him while you continue running further and further towards the top.

If you work hard and get lucky you may be able to get so far up that field that you end up in a rich-get-richer re-enforcing circle. Just remember what it took to get there, the people that helped you along the way, and those who can’t get there, too. If you do get to the point of massive scale and riches, you won’t be earning your money anymore. Others will be helping to earn it for you. No one does it alone.

An Open Letter to Google’s Matt Cutts: On Penalties & the New Link Disavow Tool

Dear Matt,

Thank you for launching the new Link Disavow Tool. Hopefully it will allow a number of high quality sites and businesses that were hit by penalties like Penguin to recover. My concern however is that it will create more confusion than already exists, as impossible as that may be. I doubt you’ll be keen to remove this tool just after launching it, but either way I’d like to propose a much simpler alternative.

First, The Problem:

Many high quality sites and businesses have been hit by massive penalties since Panda. I’ll refrain from talking about Panda from here on out since it’s not primarily related to links, but it was around that time that you guys (Google) seemed to shift from smaller, more targeted penalties and algo adjustments to massive penalties and devaluations with a great deal of ‘collateral damage’. I realize there have always been changes, but I’ve been working online full time since 2005 and have never seen anything like what’s been going on since February 2011.

I’m sure you know the SEO game a lot better than I do. Since I started out on the web, you needed links in order to rank in competitive niches. In my primary business niche, if you didn’t get links, you didn’t rank. All of us bought links, because we needed to in order to rank. I know this. You know this. Aside from buying links to rank among our real competitors, we also needed them to rank above spammers with low quality affiliate and made-for-Adsense sites. We did have a choice, but as a real business there was only one good one at the time. Buy links and rank, or don’t buy links and be outranked by competitors and spammers. Surely you already know that.

I understand you want to get rid of low quality sites in your search results. I’m all for that. I want to see quality results as much as the next guy. I’m a searcher too. But when you guys started applying negative factors to spammers and low quality sites that bought links, you also wiped out scores of high quality sites that were forced to buy links in order to outrank the spammers for the last several years. It’s not only spammers that buy links. I’m sure you know that, too.

So why are you decimating these high quality sites and businesses? For a while, I thought you were just evil people acting in your own self interest with no concern for others. But I had a conversation with a programer the other day who had another theory: It’s not that you guys are evil, careless people. You’re just so focused on fighting spam that you don’t even see the ‘collateral damage’. You see the low quality, spam sites that get taken out, and you see the big brands that continue to rank no matter what they do, and all looks ok. You don’t see the diversity that your updates are wiping out, the specialty sites that offer a better user experience than the big brands…the sites that previously needed to buy links in order to rank. In fact, regardless how good your intentions are, these small sites likely still have to buy links in order to beat the slew of big brands who are now able to rank blank pages with keywords in their title tags due to their massive authority and head start in the race.

The Link Disavow Tool

Enter the new Link Disavow Tool. Now, quality sites have a way to remove those links they used to need in order to rank…those links that you guys attached a negative ranking factor to, or used to trigger a site wide devaluation like Penguin. So if a business owner is lucky enough to have heard about Google Webmaster Tools and read about this new tool, they might have a chance at ranking their penalized site again.

But Which Links Are Problematic?

I’ve got a blog that I unfortunately haven’t posted on in over a year. It’s a real blog with no ads or affiliate links. A couple of years ago someone contacted me about doing a guest post, a completely legitimate guest post that was on topic and written by a topical expert. A few months ago I received an email from an SEO company requesting I remove the link to help their client recover from a Google penalty. How many people will use your new tool in such a way, to remove legitimate links that are helping them rank? How many sites will look to you like ‘bad’ sites, because people mistakenly request that links on them be disavowed?

I know you offer some guidance on that subject. But you and I both know that many people won’t even know your tool exists, others won’t read your guidance, and plenty people who do read it still won’t know which links to disavow.

A Much Simpler, More Ethical Solution

The current penalties are applied according to a ‘guilty until proven innocent’ approach. That might be ok if we were discussing hobby sites. But I talked to a guy two days ago with an awesome, incredibly useful site that fulfills an important need, especially in today’s economy. He’s about to sell his house, move his family, and begin looking for a new job due to his business being decimated by these penalties. He’s been labeled as guilty for doing what it took to compete. There are thousands of similar cases. I can only hope you guys aren’t thinking about them because you’re so focused on the spammers.

So rather than applying a negative value to links you don’t want to count, how about simply not counting them? At least you wouldn’t be penalizing high quality sites and businesses. If they were ranking solely on the basis of those paid or otherwise low quality links, then they’re going to have some work to do. But that’s unlikely. If they are a high quality site, they’ll have some high quality links too. The spammers will have less. So by simply discounting the spammy or low quality links, you’ll be ensuring that the quality sites rank above the spam sites.

Spammers will keep trying to game your algorithm. They’re going to do that anyway. They’re going to keep sending me loads of junk mail, bombard my blog with stupid comments, and even hack my sites with links cloaked for only Googlebot to see. None of that is going to change. Adding a negative factor to paid and spammy links might cut down on attempted manipulation. But it’s also decimating high quality sites and businesses.

So I understand you’re waging a war on spammers. I’m glad you are, as I don’t want to find spam when I search, and I don’t want to see spam sites outranking high quality, informative, useful sites. But the way you’re doing this now…penalizing sites that only did what they needed to do in order to compete under the system you built, using a ‘guilty until proven innocent’ approach, and then requiring them to use your link removal tool…is both unlikely to work well and unethical.

With all due respect, for the the sake of all humanity, please simply don’t count links you don’t like!

How a Panda Penalty and 60% Traffic Drop Nearly Doubled Our Sales

A while back I posted about my e-commerce site recovering from Panda. In that post I mentioned that the site suffered a 60% drop in traffic. What I didn’t mention is that despite the massive drop in traffic our sales nearly doubled that year (2011). We didn’t expect it, and it wasn’t directly due to the change in traffic. The sales increase was caused by our efforts to increase our conversion rate to offset the traffic loss.

Here’s How We Did It

We read a book called The E-Myth Revisited. If you’re running a website or business, I very highly recommend reading it. Some aspects of the book come across as rather elementary, and there were sections that could have been left out. However, the substance of the book was excellent, and it caused us to change the way we looked at and ran our business, including our e-commerce site. I’ll only describe here what applies to our increase in conversions and sales, but there are other great and beneficial reasons to read the book.

Although customers loved our site and it had a very professional design, we had never put an overall vision for it into words. It was really just a site selling products, along with useful information for our customers + excellent customer service. One of the steps in “The E-Myth Revisited” is to write down a vision for your business…what you want your business or site to convey…what you want people to feel when they land on your site for the first time or walk in your door.

A Unified Vision

Actually coming up with a single sentence for our vision wasn’t easy, but once we did it we felt we had a real purpose. We had a single goal or vision that every page on the site should attempt to achieve…a single unified feeling for every aspect of the site. So we got to work on making that happen. We made relatively simple changes to the design…a color here…a message there. But the impact was amazing. The day we made the first changes, our bounce rate was cut in half and average time on site nearly doubled. Conversions more than doubled, and sales went up by almost 100% for the year.

So despite losing 60% of our traffic from Feb. to the end of the year due to Panda, our sales were about doubled compared to the previous year. And it wasn’t due to a change in search traffic or the terms people searched for to arrive on our site. The data was consistent across all traffic sources…not only Google, but also Yahoo and Bing where we had not been penalized.

One Change, Not Many

In every previous year we attempted to maximize our sales and conversion rate. We made numerous changes to every element of our site, but each one either had very little impact or none at all. It wasn’t until we changed one thing that we saw a huge and instant impact…the vision. And that vision was based on feeling instead of product specs or direct benefits.

Why Feeling Beats Logic

When a customer arrives on your site, they’re going to instantly feel a certain way about it. If they’re looking to purchase something, they may very well decide to make that purchase or not within a couple of seconds, without even having read anything about your products. Most of them will use thinking and logic after, to support the decision they’ve already made based on how they feel about your business.

What’s more important than anything else, is that your website conveys a feeling that puts your customer in the mood to do whatever it is you want them to do.

Product specifications, direct and indirect benefits, price, etc…it all matters.  But it’s all secondary to the way someone feels when they land on your web page. If they don’t get a good feeling, if you don’t put them in the mood to buy, it doesn’t matter how good your product or sales copy is…most customers aren’t going to buy from you.

This year we focused on reducing the amount of product specification and benefit language in our marketing, and focused instead on the feeling people will have when they use our products. And our conversions are up nearly 30% over last year.

For us, getting hit by Panda and losing 60% of our traffic caused us to try to improve the aspects of our business we could improve. And it worked, extremely well. Whether your site has been penalized or not, make sure you’ve got a written vision based on what you want your customers to feel, and make every page of your site convey that feeling. You’ll be glad you did.

A Final Note

Despite our substantial increase in visitor engagement signals, our e-commerce site was hit again by Panda 20 (what most SEOs are calling the latest one) after having recovered this past March from Panda 1.0. This is yet another indication to me that Panda is not primarily concerned with what’s good for visitors. Our bounce rate is just under 20%, with ~6 pages viewed per visitor, and just over a 4 minute time-on-site average. This highlights the need for multiple traffic sources and promotional methods even for high quality businesses, in addition to keeping fixed expenses as low as possible.

Google EMD Update: The Real Story

On Sept. 28th Google’s Matt Cutts tweeted to announce a “minor weather report” designed to reduce rank for low quality exact match domains (EMDs), later claiming it would only effect .6% of English US queries.  As has been typical recently, there’s a lot more to this story.

In April of this year, Google launched a Panda update on the 19th, a Penguin update on the 24th, and another Panda update on the 27th (timeline here).  In addition, other dials were turned during this period to increase rank for authority sites and tighten filters for anchor text over-optimization.  Previously, Google had been updating Panda on a monthly basis.  But more recently, updates and algorithm changes have been packed together, often with misleading announcements.  This so-called EMD Update was no exception.

Update Codename: Misdirection

On most popular SEO blogs and forums, people tend to attach themselves to whatever Matt Cutts announces, making it easy for Google to point right, throw a cookie in that direction, but then run left…while everyone is still looking the wrong way and missing the real story.  Look a bit deeper into the comments or follow up posts, and you’ll find a few people yelling…but that’s not what happened to my site.  These comments are usually followed by others who have taken Google’s bait, continuing the misdirection.

While there may have been an update that targeted “low quality” EMDs, there definitely was a massive across-the-board penalty that hit non-EMDs.  Here’s proof:

Google EMD Update

EMD Update Hitting Non-EMD Sites

Both of the above sites were long time small businesses in an e-commerce niche I follow, neither with EMDs.  (The screenshot is from Advanced Web Ranking.  The numbers on the left side of the columns are current rank.  The numbers on the right side are the positions lost or gained.  The change shown is between Sept. 27 and Oct. 1.)  Here’s another screenshot from an entirely different, non-commercial niche:

EMD Update

Codename: Misdirection

Again, neither of the above sites was an EMD and both have been around for nearly a decade.  I could post screenshot after screenshot, but they’d all look the same.

Speculation

This update, or something released around the same time, looks more like a Panda or Penguin style devaluation, and it clearly affected far more than .6% of queries.  Every query I track, and I track a lot of them, had sites that range from slightly devalued to decimated across-the-board.  It’s impossible to come to any definitive conclusions at this point in time, but to me this looks slightly more content related than link related.

Do you have a non-EMD site that was hit by the EMD update?  If so, let me know in the comments, along with any thoughts on the cause of the hit.  I’ll update this post or post again as soon as I have more information.