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LinkExchange Daily Digest
"Effective Online Advertising"

List Moderator: Adam Audette
Supported by: LinkExchange
aa@le-digest.com http://www.adventive.com
June 09, 1999 Digest #618

Search Engine Optimization
~ Rod Aries

"...there is value in the small business lifestyle."
From: Rod Aries <howtointernet@home.com>
Subject: "BIG business on the net..."

In response to Barbara Becker, who commented:

>Very few investors would value search engine ranking much.<

The value is not in the ranking, the value is in the traffic generated, and how many turn into customers and repeat customers. Additional value is obtained by having lower operating expenses due to virtually no marketing costs, sales people, brochures et al. And there is value in the small business lifestyle.

<snip> >Anyone who gets a lot of business from a high search engine ranking has a very small business.<

Oooo, I don't like that comment, nor do I believe it... OK, before I get off on my big business rant, I need to preface that I have been an officer in a publicly traded corporation...been there -done that. Besides, even big business was small business at one time.

<snip>
 >There is nothing wrong with having a great ranking for a small business and enjoying the benefits it brings.<

Hmm, I guess it depends on what you mean by "small business..." Besides, when push comes to shove, I think many people will be quite satisfied with a small business with high personal income. I mean, how many Fortune 500 businesses are there? 500... How many non-Fortune 500 businesses are there? Hundreds of thousands. Besides even in a big business like FedEx, very few people actually "make it big" other than a few bonuses or stock options for a small percentage of the overall workforce.

Now let's look at a couple of "small business" examples:

- I own quite a few domains. My busiest site receives close to 1M page views a year, 98% of those views are as a result of my search engine management skills. I only do business online, and have no employees for this venture. Why would I want to have an office with rent, utilities, coffee machines; printed material and letterhead stacked in a corner; salespeople calling on customers they don't know - (maybe 8 a day, while I get thousands a day to my site); an assistant who had a fight with their spouse and doesn't feel like working today; and a daily 30 minute drive to physical structure that closes at 5 pm. If these are the advantages of big business, keep it :)

What does it cost me? Just my time and expertise to obtain and maintain my rankings. What does it earn me? I would wager that I earn more than 98% of the people at big business FedEx, and I would put my lifestyle up against 100% of the FedEx people. (When the ocean is surfable, at 44 years of age, I surf, sometimes twice a day... Hopefully there is someone out there in a FedEx cubicle saying, "Shred dude!")

- I have had a mortgage broker client for the past 11 months - and after tweaking his site, he now receives an EXTRA 300-1,000 calls a month, from his web site, SOLELY due to search engine rankings. These 300-1,000 calls are not about the weather, MP3, the Star Wars movie... but about mortgage loans; people who want a home loan right now. What is each typical closed transaction worth to this broker? 'bout $1,000 - $3,000 a pop... multiplied by however many of those extra calls actually turn into closed loans. He is the sole owner of the business, so all the net profit goes directly in his pocket. Oh, and he only does Southern California...We are now optimizing for a few more regions.

- I have another client - 10 year old distribution firm, 25 employees - small business. I have created, in less than one year, an ADDITIONAL $1M in revenue SOLELY from his web site, SOLELY from search engine management and optimization. How many additional employees did he have to hire? ONE, someone to answer the email and enter the orders.

Hmm, let's do the math, $1M extra in income, less some UPS shipping, less 800 calls, less, say $25,000 in salary and benefits for the extra employee. Now, to me, that is BIG BUSINESS...

<snip> >However, most large web based businesses get very little traffic from their search engine position.<

I guess that is what happens when you spend tens of millions of dollars in the real world...

<snip> >Most of the business will be from aggressive marketing - banner ads at the search engines...<

My favorite banner ad saying, "Banner ads are for those who don't know how to optimize their web site." OK, I will back off a bit; banner ads have their place, and can even be effective when properly placed, but many (web) surfers are becoming a bit immune to those flashing, blinking, neon red, pulsating, undulating, annoying little 468 x 60 pixels of blind spot on a web page... And guess what, if that banner ad is really effective, your competitor will just buy your place next month. I guess big business does have its advantages.
<snip> >...on other sites, off-line marketing, etc. Small businesses most often sell for less than 1X annual net income. The typical NYSE stock sells for closer to 40X annual net income.<

OK, let's assume I buy that... Time for more math... you own 100% of a small business and it sells for 1x earnings. You get 100% of this... Cool.

Now for the 40x earnings model. Sure, there are companies that are in the right place at the right time (Yahoo, Ebay etc) but that assumes you started the company; or at least work there... Most likely, if you are lucky, you are an employee, so MAYBE you own 0.0000000000000000001% of a big business that sells for 40x earnings. Well, if that is the case, good for you. I will think about you next time I blow off an afternoon to take my daughter to the Del Mar Fair, or drop down the face of a 8 foot peeling left wall of refreshing water, or just enjoying a mid-day nap with my wife :).

So, back to the original question:

>Very few investors would value search engine ranking much.<

You know, that may be true, but for the vast majority of people with internet companies, it is not what the investors value your site at, it is how you value your search engines rankings... :)

At your service,
Rod Aries
How To Internet Your Business
http://www.howtointernet.com

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