A common urban sight like the above wouldn’t seem to conjure up much thought but to me, this image says many things. These bundles of Verizon Yellow and White Pages get dumped in my Brooklyn neighborhood seemly per quarter. They get left on the curb and just as effortlessly ignored as they make a b-line towards business model extinction. I’m trying to figure out why Verizon still publishes these. I guess in a neighborhood as diversified as mine, there are plenty of people who still rely on printed directories. For the most part it seems like these directories end up ignored as they eternally lie in apartment complex hallways or eventually in a landfill.

So my questions are:

• How much money is spent organizing, formatting, printing, and delivering these things?
• How is advertising within these sold to the advertiser?
• Just how effective is the advertising?
• What’s the carbon footprint of their production?
• If only 20% (based on how many copies visibly remain) of a community uses these, could this be considered littering?
• Are the chemicals used in the paper and ink environmentally toxic?

This not only seems like a dead and fruitless business model but also environmentally irresponsible. I would be willing to guess that:

• A lot of time, money, and effort is placed in production and delivery.
• The adverting is sold as part of a larger marketing package.
• The effectiveness of the advertising is near zero.
• The carbon footprint is extremely high.
• If these are as useless as they seem, the amount of litter would be astronomical.
• The chemicals used in production could be harmful in large quantities/concentrations.

Need SEO, SEM, or Social Media help? Hire Squareoak!

With all that’s happening with the economy as of late I’ve been very interested to learn how the current and future economic state will affect the search marketing industry. The guest economist is a good friend (featured on the Squareoak blog before) who is an economic consultant for a research firm in New York City.

Thank you for taking the time to talk with us today.

My Pleasure

I’d like to pick your brain about how the economy’s downturn might affect the search marketing industry. Year to date, Google’s stock is down, Yahoo is laying off between 10 and 20 percent of its staff…things seem to be happening that would indicate an economic recession. As search marketers, what do you think would be the best indicators to look at in order to best gauge how our industry is going to perform?

I would expect that search marketing would fit general advertising trends, at least to some extent. It’s expected that advertising will trail the economy in a recession: advertising budgets are usually committed in advance, companies don’t want to cut back on advertising and decrease their sales unless it’s clear that consumer spending is going to be less responsive to advertising, and they’re not likely to make big moves on their advertising budgets until they feel the effects of decreased revenues. Search marketing isn’t exactly like other advertising, however. Search marketing seems a little more essential than a huge Superbowl ad, for one. Also, search marketing — just because of the nature of the internet — can be more international than other advertising, so it might be less affected by a US recession. But it is certainly not immune — and when consumers stop buying as many goods online and companies don’t have the money to spend on campaigns anymore, search marketers are sure to feel that.

So say the economy is totally screwed and we are in fact going into a recession. Do you have any advice on how to protect ourselves?

Well let’s first back up to how that would even affect you. A lot of people will speculate on it — but to find out with a little more specificity, you’d want to regress, or find the correlation, between overall advertising budgets and various economic indicators we’re seeing now — consumer goods (particularly non-essential goods), changes in the Dow, the consumer price index, even what people call “leading indicators” like Starbucks revenues (supposedly go down before a recession) or lipstick sales (supposedly go up in a recession because they’re a small indulgence). Once you predict where advertising is going in general, then you want to find trends in online advertising as a part of those overall budgets — if online advertising is growing as a percentage of overall ad spending, then search marketers are much less likely to feel the recession than print media, for instance. Basically, that’s what you want to focus on — showing that returns per dollar spent on search marketing are larger than those for print media — and that those returns are less elastic, or responsive, to overall changes in consumer spending. Furthermore, you’d want to show your customers that search marketing is a necessary cost of doing business – just as important as any of their fixed costs. People aren’t going to take down their company website during a recession unless they’re bankrupt. If people believe that showing up in a search query is just as important as having the website in the first place, they’re not likely to cut down on those budgets.

Also, you could seek out customers in recession-proof industries. These are often thought to include health care, pharmaceuticals, groceries, utilities, and even “necessary vices” like cigarettes and alcohol (but I’d seek out Miller, not Krug)

So for the most part you’re saying that our industry is probably ok? Or at least less susceptible than other advertising channels.

I would think that it should be less susceptible than other advertising channels, but even very recent history reminds us that internet companies like Yahoo are certainly not recession-proof. Nevertheless, there are certainly equity analysts like Piper Jaffray on your side, who say that online advertising should be immune to a recession.

That’s a relief. I just hope I won’t have to get into online lipstick sales [smile]

Another boost to you is that people will be spending a lot on online advertising for the upcoming elections.

This is true…

Looking at Techcrunch today…there is a lot of VC dollars being thrown around. One acquisition includes that of Cleverset for $10 million to Art Technology Group which is an e-commerce software company. If there are people making large investments in e-commerce then I should hope that the online economy has a slightly different agenda.

Certainly. Analysts and investors certainly seem optimistic about online advertising and business, which means that dollars are more likely to be coming your way — but that said, this is a sector that we’ve had little time to observe in terms of how it responds to macroeconomic shocks. Analysts certainly miscalculated the future of wild growth in Silicon Valley. This doesn’t mean that online advertising will follow a similar path, but it does reinforce that a lot of this is pure speculation. Nevertheless, the forecast is good.

So turning back to the US economy as a whole, what are some other economic indicators to look out for? Starbucks sales should drop and lipstick sales go up? What else?

Well, the Conference Board follows an index of leading indicators that are supposed to predict where the US economy is headed. They found that this past December, four of the ten indicators increased: namely, were vendor performance, real money supply, stock prices and manufacturers’ new orders for consumer goods and materials. However, 6 of the ten took a turn for the worse: were building permits, average weekly manufacturing hours, manufacturers’ new orders for nondefense capital goods, average weekly initial claims for unemployment insurance (inverted), index of consumer expectations, and the interest rate spread.

Historically, are presidential elections seen to hurt or help the economy?

The effect of presidential elections on the economy is not uniform, but a study published in the Journal of Financial Research in 2006 finds that in elections that do not have one dominant candidate, stock market volatility (risk) and average returns rise. Also, special interests play a role in elections, and candidate-favored businesses or firms are likely to do better (or worse) based upon polls and eventually, the outcome of an election. I would imagine that if the population considers that the incoming president had a strong economic policy, there would be a short-term positive effect on the economy as a whole and consumer spending. Long-term, any changes would depend on the actual efficacy of the president’s policies. Researchers are puzzled, however, by the fact that the excess return in the stock market is higher in Democratic than in Republican presidencies, which is not explained by business-cycle variables.

I’m not as familiar with how elections affect the economy once it already seems headed for recession — even if there is a significant effect, I’m not sure how long-term this would be. This 2008 election will certainly be driven by economic factors. That’s clear just from hearing the debates so far. People are very concerned about spending policies, balancing the budget, social security, and protectionist/free trade policies.

Well with all that has been said it’s comforting to learn that our industry is more impervious than others when it comes to economic recession. Thank you for taking the time to talk with us about this today.

My pleasure. I’ll keep my fingers crossed. [smile]

As will I [smile]

In order to see how these two sides potentially go about their business, let’s give a top black hat and a top white hat the same challenge. What if we gave each pro a simple website (same industry and page count) to optimize and market? The winner would have the most backlinks and traffic for their respective sites.

The black hat would autosubmit their site links to bulletin board systems, catalogues, forums, and guestbooks, receiving loads of traffic and backlinks. This strategy would be almost guaranteed to work but only for a week, if that, until Google figures it out and places the black hat’s domain in permanent solitary confinement. The white hat would bookmark, network, create content and submit to the social news sites, possibly breaking through on Digg receiving 100,000 hits in a twenty-four hour period. Each strategy would work well but it’s most likely that the black hat would walk home victorious at the week’s end. However, if we’re measuring success via staying power within the search engine indexes, the white hat would be the victor.

Many of us perceive black hat to be evil because of the ominous name and because black hat tactics usually aim to compromise the integrity of online properties for personal gain, an obvious moral disincentive. But is it really evil?

Your decision to stay within the white pastures or go hunting in the black forests boils down to a moral and social decision. If you’re a good white hat, over time you’ll build a solid reputation. You’ll be respected in the community and have various companies knocking on your door requesting your services. Hopefully you’re adding valuable or interesting content to the internet. Even though your efforts are propelled by a paying client, your content is still good, interesting, educational, and respected. Over time you’ll make good money and you may establish yourself as an industry expert.

If you’re a good black hat you’re pumping sites and making a quick dollar. You’re in it for the cash and you could care less if catzforum.com is having serious spam problems. You’re in it to buck the system and you feel that Google is blacker than the blackest of hats. You’re not doing it to build a reputation; you’re doing it to buy that lovely beach house in Monaco and the rare Aston Martin you’ve always wanted.

So…who are you? Black hat, white, or maybe a bit of both?

Industry References:
SEO Black Hat Brain vs. White Hat Brain
My boss is obsessed with Black Hat SEO
White Hat Vs. Black Hat

I never speak negatively of people related to our industry, it’s simply bad form. However in this case, I feel like I have to defend myself. I was checking the backlinks to my site and noticed some traffic from ClipClip.org. I followed the link back and found a relatively negative post about Squareoak from a user named John. In the post, John is commenting on this Squareoak post that lists the javascript for auto populating many bookmarking sites. This javascript is something that bookmarking sites provide so that users can simply click on the bookmarklet in their toolbar and post whatever content they’re currently viewing. For some reason John thinks that my post is somehow spammy. Not only is this javascript provided by the bookmarking sites themselves but my suggestion of replacing a standard bookmarked URL with the actual javascript provided can help people save space in their toolbar. This increased efficiency also helps and promotes the intent of sites like ClipClip.org.

If people decide to use existing ClipClip.org functionality for spammy purposes that’s no fault of mine. It’s simply a little off-setting when someone with completely unoriginal ideas like ClipClip.org or URL.com associates my corporate image with spam. I detest spam, it’s the antithesis of the internet’s intent. Thanks for the shout out John but do me and other industry professionals a favor and keep your clips to yourself.

Oh and if you’re going to publicly criticize me, could you do it with more than a frowny face?

Warning: Opinionated post which contains no web tool links, no web trend news, no amazing search marketing discoveries, and zero insight into ranking algorithms. What this post is about is the flagrant and unoriginal content that people pepper within their blog posts in order to rank for current trends and gain residual traffic.

The utopian and idealistic purpose of the internet is to deliver relevant content to those who seek it, accurately matching user query with quality content. Those who blog solely for the purpose of earning ad revenue are more often than not contributing to what the internet isn’t.

This post will in no way deter those from exploiting search trends but I hope to somewhat reiterate what’s important. The web should be our chalkboard, documenting the pursuit of knowledge and providing the most collectively accurate answers to those who seek them. Adding junk, trash, and spam to our environment seems to be an unfortunately human characteristic that not only muddies the waters of useful information but also permeates past this digital realm.

I’m tired of unoriginal content, of thoughtless spammy online fodder, and anything antithetical of the internet’s intent. I’m already an environmental advocate (as are most people these days) but how about we start greening the online world too?

We should blog to help others find useful resources, bring to light industry news, introduce new ways of thinking, and collaboratively test our theories. We should stop thinking about how we can benefit from the internet and start contributing to its positive and collective pursuit of knowledge and discovery.