tech

SEO is no longer a viable marketing strategy for startups

Many of the today’s most successful informational sites such as Yelp, Wikipedia and TripAdvisor relied heavily on SEO for their initial growth. Their marketing strategy (whether deliberate or not) was roughly: 1) build a community of contributors that created high-quality content, 2) become the definitive place to link to for the topics they covered, 3) rank highly in organic search results.  This led to a virtuous cycle where SEO drew more users, leading to more contributors and more inbound links, leading to more SEO, and so on.  From roughly 2001-2008, SEO was the most effective marketing channel for high-quality informational sites.

I talk to lots of startups and almost none that I know of post-2008 have gained significant traction through SEO (the rare exceptions tend to be focused on content areas that were previously un-monetizable). Google keeps its ranking algorithms secret, but it is widely believed that inbound links are the preeminent ranking factor.  This ends up rewarding sites that are 1) older and have built up years of inbound links 2) willing to engage in aggressive link building, or what is known as black-hat SEO. (It is also very likely that Google rewards sites for the simple fact that they are older. For educated guesses on which factors matter most for SEO, see SEOMoz’s excellent search engine ranking factors survey).

Consider, for example, the extremely lucrative category of hotel searches. Search Google for “Four Seasons New York” and this ad-riddled TripAdvisor page ranks highly:

(TechCrunch had a very good article on the TripAdvisor’s decline in quality).

In contrast, this cleaner and more informative page from the relatively new website Oyster ranks much lower in Google results:

As a result, web users have a worse experience and startups are incentivized to clutter their pages with ads and use aggressive tactics to increase their SEO when they should just be focused on creating great user experiences.

The web economy (ecommerce + advertising) is a multi-hundred billion dollar market.  Much of this revenue comes from traffic that comes from SEO. This has led to a multibillion-dollar SEO industry. Some of the SEO industry is “white hat,” which generally means consultants giving benign advice for making websites search-engine friendly. But there is also a huge industry of black-hat SEO consultants who trade and sell links, along with companies like content farms that promote their own low-quality content through aggressive SEO tactics.

Google seems to be doing everything it can to improve its algorithms so that the best content rises to the top (the recent “panda” update seems to be a step forward). But there are many billions of dollars and tens of thousands of people working to game SEO. And for now, at least, high-quality content seems to be losing. Until that changes, startups – who generally have small teams, small budgets, and the scruples to avoid black-hat tactics – should no longer consider SEO a viable marketing strategy.

Categories: tech

47 replies »

  1. [this comment got deleted]

    >But if you believe that Google has pretty much nothing to do with the decline of newspapers, isn’t the >rest of your post simply a red herring? Why does it matter then that newspapers don’t get a rev >share from Google if that has nothing to do with their problems?

  2. I think the decline of newspapers is due to 1) decoupling of classifieds and other revenue generating categories from straight news, 2) vast overabundance of competition from other newspapers, blogs, etc. And it is compounded by the fact that there is a single dominant search engine.

  3. I totally agree that “there is nothing inherently un-monetizable about newspaper content.” I think the problem comes from a sort of self-esteem issue of the newspaper itself; a fear that if they start charging for their content, no one will read it at all. This is silly for a couple of reasons, 1) most newspaper make a tiny fraction of their revenue from their web presence compared to their off line paper (except for those that charge for it), 2) if the content is so poor that no one is going to pay for it, how can an advertiser justify paying any sort of premium (or even pay at all), and 3) I really believe that people recognize good content and they will pay for it when asked.

    Google is only a plus for the newspaper; obviously, it sends them traffic. The newspaper, on the other hand, needs to have the courage to change what they do with that traffic. My suggestions are:

    1) Push online visitors to their offline paper. I know, this is going to sound like heresy to some, but the fact is, print ads demand a MUCH higher rate than online ads – the the reason you state – scarcity. Give online readers a teaser to the off line paper, give them community, give them collaboration on a topic and respect for their view points – but if they want your content, they need to read it off line.

    2) If you cannot stop putting your content online, then charge for it, but do it in the following way:

    a) Allow me to see what other people are paying for that content, and let me see who they are; give me a Digg, but with money as the currency for recommendation.

    b) Allow me to decide what an article is worth; don’t make me pay a quarter, allow me to pay anything I want, maybe with a minimum; also, I want to buy the single, not the album, but with newspapers, if you know what I mean.

    c) Only allow comments on an article if the person has paid for it; start a different type of dialog between the writer and the reader.

    d) Allow an ecosystem to develop between someone who is creating content that has value, and a group of people who recognize that value and are willing to pay for it.

    f) Although it would bother me, sell ads against content that someone has paid for; I am far from an expert on this topic, but it seems to me that you could charge a premium for an online ads placed next to content that someone has deemed valuable enough to pay for.

    Finally, g) allow me to get a full refund for the amount I paid, immediately after I read the article, if I so desire; I may need to tell you why, but I should be able to vote with my dollars on the value of what I’m reading.

    Josh

  4. I am curious: what is the great invention Google created? Great company, definitely, but invention? Search (it was Altavista)? Or do you consider the adwords as one of the greatest invention?

  5. It would be useful to know what percentage of traffic to newspaper sites is driven by organic search. I have a suspicion that it’s not too high, especially when compared to other forms of referrals (passed links, etc).

    Newspaper owners appear more annoyed with aggregators, which allow content to be viewed out of context. That said, your arguments regarding Google’s bargaining power in search are pretty much unassailable.

  6. I have always thought Microsoft should pay to get the exclusive of say NYT and WSJ to help gain market share. Maybe it it just too costly for the content providers to be tied to single gateway. I think content providers benefit from being on yahoo and now it seems yahoo is trying to increase its own original content.

  7. I think their search engine was a significant advancement over past search engines. The idea of using links & anchor text and the non-trivial algorithm behind weighting those properly (pagerank). Plus just the product focus of having a simple dedicated search engine when everyone else was building massively cluttered portals.

  8. While I agree “there is nothing inherently un-monetizable about newspaper content.” It doesn’t follow that the money must come from Google (or another search engine). In the bizarro world you describe, where there are only 5 newspapers, those newspapers could probably charge their actual users for access.

    It’s not like people are just logging onto Google News to get their news. A sizeable number of people continue to navigate to their favorite news sites. In a world where there are fewer news sites, why wouldn’t they be able to charge their users directly?

  9. Maybe if someone built a better search engine, then they would lose market share. I don’t really understand what your point is. Assume that Google switched to opt – in, in that it would only index your page if you explicitly opted in. What do you think the nytimes would do? Opt in.

  10. We often struggle to understand the internet with “real world’ metaphors, even when they might not be applicable. I think that’s part of the issue with what you’re suggesting.

    Let me employ another real world model to explain. Cable or satellite television. Content owners will negotiate carry fees because of the various networks don’t carry them, they don’t get seen — period. Channels in demand can get paid; those not in demand might have to pay.

    You kind of suggest things should be like that for Google. That it will carry anyone for free, but if someone refuses, it doesn’t care — no one channel is big enough as a must include. So all the other content owners lose out, so to speak. They can’t get paid their worth.

    That’s flawed. The fact remains that if you’re not in Google, you still can be viewed, so to speak. If I want New York Times content, I can go there. Go on, take out Wikipedia. I know where to find it. I never search on Google for some things that I know I want from Amazon. I’ve learned where Amazon is, I go there.

    This is something I once described as the “search gap.” We know that something like 90 percent of people search on the web each day. But sites do not, on average, get 90% of their traffic from search engines. It tends to be around the 30% range. Why the gap? Because many people, once they’ve discovered a site, go directly back to it.

    We’ve had a far more competitive situation with search engines in the past, say late 90s and early 2000s. Google wasn’t so dominant then. And newspapers nor anyone was able to demand the carry fees you suggest. Actually, it was the opposite. It was far more widespread that search engines pushed the paid inclusion idea — want to be in our results? You pay to make sure we get more than we might normally find.

    Honestly, I don’t see why newspapers or any content owner should get special treatment over others. Google for all its flaws is a fairly level playing field. Good content rises to the top. Let the papers participate in the same environment as the rest of us.

    (I, for one, wouldn’t miss Wikipedia).

    While the buyer/supplier demands of the “real world” might be interesting, I don’t think they apply here.

    It suggest that each and every web site should be negotiating with Google for carry fees, as if Google is some type of cable network and that people can only get to the programming if Google carries it. Important channels can charge more, because the network knows its audience

  11. Rather than crying foul, maybe newspapers should join together and get something akin to a search engine going. Where people can choose their locale & set their preferences.

    A paper “customized” to each individual’s needs .. I get to read writers I like in one place regardless of which publication they are currently affiliated with. Maybe rather than trying to protect their turf, they should concentrate on adding more value to their customers

    Besides, this isn’t the first time an industry has been in treat of losing control of the distribution ..

  12. wsj doesn’t seem to need Google to make a viable business. I think the arguments around a world with or without Google are specious. (The model of a world of partitioned crawling is just a bizarre creation that only makes sense as a way to prop up the rest of the argument that having a dominant search engine causes all sorts of problems.)

    A dominant search engine does cause all sorts of problems if the only way to structure things is by making them free-with-ad-support because then you have a middle man as the only route to profit. In that world, the content providers make less money because they are put in direct competition with all of the other content providers… and, it turns out that the world is awash in content. The only one guaranteed to get good ad-traction is the middle man.

    Most of these discussions involve tons of post-hoc reasoning where the free content and use of ads to subsidize our habits are kept constant. The audience prefers lots of great, free content, of course. And, as it turns out, the content providers prefer the juicy margins they used to make. Two poorly kept dirty little secrets…

    I think both sides are going to end up needing to give some.

  13. First let me say that my point was mainly academic. I was trying to refute a certain form of argument. I don’t think anyone “should” pay Google anything. I have no dog in this fight and if I did take sides would probably take Google’s.

    Your comparison to the cable companies is a good one. Does the fact that I can get around cable companies, say via Hulu or piracy, change the basic bargaining dynamics? It’s not whether you *can* go around – it’s whether in practice people actually do. As long as the cable companies have 90% share, they are going to have bargaining power.

    Your point about the search gap is interesting. If people use search engines to discover sites and then go back directly in large volume, that indeed would be a strong counterargument to my argument.

  14. Sure, they would definitely opt in. My point is that you have to opt in to Google because of their incredible dominance versus websites that “provide them content.”

  15. You have the right intuitions, but one thing missing from your argument is that there are far more newspapers/news organizations than there are search providers (even under the hypothetical situation with 20 search engines). The bulk of news content today is commoditized — I will gladly find more than 100 distinct articles on any major news item today, and sure enough the 100 will have more or less the same editorial content. Commoditization of news means that whether there are 2 or 20 search engines, each search provider will have no incentive to pay anything beyond commodity prices (in this case, zero) for news.

    That said, certain sections of major publications (WSJ, NYT, WP) have original content that I would pay for (and even Google may pay for). In fact, I pay for my WSJ subscription because I do believe they have unique perspective and unique coverage that is far from commoditization today.

  16. I agree actually. I think only certain parts of certain papers (the ones you mention) are non-commodotized. My argument was hypothetical to try to prove the point that just because a newspaper doesn’t want to opt out doesn’t mean a dominant search engine is good for you.

  17. True for the moment. But the number of papers (and, with AP, the amount of original content) could decline to the point that there are not too many newspaper suppliers. That’s where Chris’s argument gets interesting for me.

    But there will still be competitors — the blogs and politico.com’s. And it’s tough for me to see how newspapers will be cheap and agile enough to compete against these.

    More about that in my response post: http://elstudio.us/post-the-free-content-blues

    Thanks, Chris, for getting me thinking!

  18. I’m so tired of the PageRank myth. Every engine started using links and/or anchor text around the same time. Infoseek called it ESP, Inktomi called it LinkFlux, and so on. It made a huge difference in rejecting spam and a moderate difference in search quality. Infoseek continued to have search quality as good or better than Google.

    Google won because their pages were fast and had no ads. They ran a search charity for a very long time. Their most important technology was putting ads on the page without losing their visitors, that is, inventing the text ad instead of the banner ad.

    I was at Infoseek from 1997 until after they were bought by Disney, so I competed against Google back when it was beta.

  19. What if the search itself wasn’t free? Would people pay to use a search engine that had proprietary content associated with it?

  20. Interesting argument. Not sure I disagree. I was really just mainly trying to argue against that fallacy – or throw some actual microeconomics into the debate as you say.

  21. This post looks awfully prescient in light of the last week’s brouhaha about The Wall Street Journal and it’s theoretical deal with Bing.

    While you’re not advocating it, you are the first (I’ve seen) to point out how search competition could be explicitly monetized by the newspapers.

  22. Great perspective, well defended and described assumptions and points-> on my 8th popular post (of the 13 you listed today) I score this one 8/10.Capitalism absolutely depends on competition, hence our keen observation for potential abuse by monopolies. There is little doubt in my mind that Google isn’t approaching a search and information controlling monopoly in practice. He who gathers all the data owns it. They own our clicks/searches and click scoring.Yes there is competition, but hands down they are the best and own search. I have used Bing, and others and have found them lacking. But even in the face of this powerful search monopoly real time search, and social search as evolved. Perhaps monopolies can be bypassed in the space of the net, due to its very nature. User needs evolve, and that need drives innovation. Entrepreneurs feed off of that gap between need and availability. No one else is more empathetic to a users real needs than the relentless attention of startups. We’ll fulfill what users most need because we won’t even consider what they don’t need. Big businesses have to deal with the cost of momentum shift within their large structures, and therefore roll onward unable to change course as fast emerging markets.

  23. Some interesting ideas Josh, I certainly liked the option to only allow comments for folks that buy in. But I’d like to ad, comments are as valuable to other readers (or moreso). Perhaps prioritize the showing of comments based on user crowd sourcing (votes) and large sorts by whether or not they support the media channel (special avatar, or they show up all together up top).

  24. Their continued innovation of the implementation of search was the killer app.

    Look at the data warehouses they have created to consistently support massive web archiving and ordering. Pretty fascinating designs.

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