Bill’s post about why Borders is struggling reminded me of this. He says that “one of the biggest problems Borders faces” is that they don’t rank well in Google searches for books they offer. He may have some inside knowledge that I don’t have, but just from the outside, there are several reasons why I don’t think ranking well in Google would help them at all.

Why SEO Won’t Help Borders

Top 10 Rankings are Pretty, but They Don’t Sell Books

When Google started showing clickthrough rates in Webmaster Tools last year, the numbers came as a shock to many of us long-time SEOs. I had always believed that ranking in one of the top 3 positions for a search would give you a roughly equal shot at being clicked on. Across the board, though, what we all saw was the the number 1 spot had a significantly higher clickthrough rate, and that the rates dropped off precipitously after that.

So to have any solid impact, Borders would have to be ranking #1 for a number of different titles — not an easy task when you’re competing against the likes of Amazon.

Search Engine Traffic is Completely Unreliable

Building a business on search engine traffic is like building a house on sand. One good algorithm change can destroy a business literally overnight. I’ve been there.

It’s a Tiny Part of the Overall Traffic Universe

I don’t know how it is for books, but I know how it is for lots of other industries: Search engine traffic is an amazingly small piece of the traffic pie. At CareerBuilder for instance, we got a crazy amount of search engine traffic. We ranked great for short-tail and long-tail terms alike (and they still do). Even so, search engine traffic was a measly 5% of our overall traffic. 5%! And that’s including the significant number of people who typed “careerbuilder.com” into a search engine to get to us.

People just don’t use a search engine to find things as often as we think they do. Search engine traffic can be great (believe me, I know), but the vast majority of people will find your business some way other way. You can have a great business that never shows up in Google at all.

Just ask Borders competitor Books-A-Million (NasdaqGS: BAMM). They have a market cap almost 50% higher than Borders, and I’ve never seen them in a search.

What Will Help

Borders gets plenty of business. The challenge for them, and us, is twofold.

First, we have to do a better job at making money from the customers we already have. I have no idea how Borders makes money or how well they’re monetizing, but I see very few online businesses that are monetizing as well as they could be — mine included. We need to do a better job with what we’ve got.

Second, and maybe more importantly, we need to do a better job retaining customers. Take a look at the stats for your site. How many visitors to your site have never been there before? If you could retain just 10% of those who visit and never come back, how big would your customer base be a year from now? If you’re not following Mark Riffey, you need to be.

When all you have is a hammer, everything starts to look like a nail. I’m as guilty of that as anyone. I made all my money because of SEO, and it’s easy to think of every business idea in terms of how much search engine traffic is available. When we do that, though, we severely handicap ourselves.

Run your business like search engines don’t exist. You’ll be more successful in the short-term and the long-term.

Virtually all the sites I’ve worked with have been U.S. sites that marketed nationwide, but I’ve worked with a handful who were only interested in marketing locally.  Here’s what I’ve learned with those clients.  Your mileage may vary, but I think at least some of it will be useful.  I’d love to hear any other suggestions (and corrections) you guys might have as, again, I’m not an expert here.

Not a Magic Potion

I talk to a lot of people who think the Internet is the answer to all their problems.  It’s not.  In fact, it may cost you way more than it could ever pay you back.  When you’re marketing locally, there are often way more effective ways to spend your time and money — especially if you’ve never done any Internet marketing before.  Don’t believe the hype.

Take Care of the Basics

That said, there’s no reason not to do some basic work to give yourself a decent presence online.

Have a Great Design

This is absolutely essential.  People will judge the excellence of your business by what your website looks like.  That’s probably not an accurate indicator even 50% of the time, but it’s what people do.  A great design can be had at 99designs for less than $1,000, so you have no excuse.

Submit to Local Business Directories

Go to Google and search for Atlanta dog sitters or any other local search you can think of.  Chances are, the first thing in the search results is Google’s “local business results.”  You want to be in that list and any other lists like it.  Three places you need to be sure to submit your business to:

• Google’s Local Business Center
• Bing’s Local Listing Center
• Yahoo! Local

Or you could just use GetListed.org.

Basic SEO

Be sure your site follows basic SEO principles.  It’s not rocket science.  You might not see much traffic from search engines, but you’re sure to see none if you don’t at least take care of the easy stuff.

Network… Network… Network…

I’m not talking about offline, though that’s a great strategy too.  I’m talking about online networking.

Blogs

Be a regular, quality commenter on blogs that a) are written by people in your geographic area or b) are about topics related to your business.  Use your real name and don’t comment just for the link.  Genuinely add something to the conversation.

Forums

Same thing here: find and participate in forums that are local and forums that are about your topic.  The advantage of forums over blogs is that you can automatically include a signature on each or your posts that tells who you are and advertises your business a little bit.

Here again, though, you have to genuinely add to the conversation.  Being a valuable member of the community is why you’re there. The publicity for your business is just a side effect of how well you do that.

Twitter

Join Twitter and start posting quality stuff.  Don’t post commercial stuff, and don’t reply to others with a sales pitch.  That will do far more harm than good.

Once you’ve been on for a week or two and have some quality stuff, start following people in your area.  You can find them using Twitter’s advanced search.

And one more time for good measure: add value to the conversation.  You’re not there to market your business.

Get Noticed

Everything up until now has allowed you to interact with people who were already looking for your business (or one like it) or who already had something in common with you.  If you limit yourself to only those people, though, you’re missing a huge segment of the population.

Be Newsworthy

What can you do that is newsworthy?  Newsworthy things get into the news (thus the name).  People read the news and find out about your business.  Pick up your local paper and see who’s in there and why they’re in there.

Be An Expert

Sites like Examiner.com give you a forum to be a local expert on a very wide range of topics.  Take advantage of that.

Or, better yet, write Examiner-worthy content on your own site.  That way you own the content and you get all the publicity (and links).  Select a topic from their application form and take a look at the questions they ask in order to get a feel for what kind of content really draws readers — then get writing!

Pay-Per-Click Advertising

Finally, take a look at PPC advertising — particularly with AdWords (because of the much greater reach and much better tools).  For the people who are searching for what you’re offering, you can be front and center and control your costs down to the penny.  Start slow, though.  You can spend a lot of money in a very short amount of time if you’re not careful.  Once you get your legs under you, though, PPC is an incredible tool.

Last week, Darren and Rand had a very similar discussion at the SMX conference in Sydney and discussed why people were now tweeting far more often than they were blogging.  Are we more interested in building up our own image, and linking to others takes away from that?  Are there just not as many people blogging now as there were a few years ago?  Or is it simply that links we would have blogged a few years ago simply work better as tweets now?

It’s an interesting discussion made immeasurably more interesting to me over the past few weeks as I’ve gotten to see a real-life example.

Tweets vs. Links – Some Real World Stats

On March 18 I published “How to Sell a Website for $1M,” and links to it instantly began to be passed along — both on Twitter and on other sites.  The exposure has been relatively equal on both, so it has been fascinating to see the difference in results.

Here’s a graph of the traffic from each source over the first 19 days:

(The Twitter traffic includes all traffic from twitter.com and friendfeed.com, as well as traffic marked “direct” over and above the average before March 18.)

In the first 19 days, Twitter sent 23% more traffic than the Links did.  However, you’ll notice that the Links traffic never goes to 0 like the Twitter traffic does, so the Links are still sending traffic — enough so that they’ll eventually surpass the Twitter traffic.

Why Links Win

And that’s why Links win: they send more traffic, in a couple of different ways.

Links are permanent.  That means that on large sites like SEO Book, they’ll send some level of traffic for months, if not years.  They don’t disappear into the ether like tweets do.

Links are also the ultimate deciding factor in what pages rank well in Google.  More links means higher rankings, and higher rankings means more traffic.

Thus, even though you may get tweeted very widely, links will always send more traffic in the long run — both from people clicking through and from the rankings boost they give your entire site.

That’s not to say that tweets aren’t fantastic — they definitely are — just that links are that much more fantastic.

Share the Love

What this means is that although link love has always been important, it’s now even more important than it has ever been.  If you want to do something really nice for someone, tweet their link.  If you want to go even further, though, link it to it from somewhere permanent.

And what you’ll find over time is that the people you link to will be more likely to link back to you.  It’s  human nature.  I go out of my way to link to people who have been good to me, and I know others do the same.

It’s a good deed that often comes back around.

Wow, was I wrong.

I can’t believe all the information that is available at a glance.  Every time you hit a site, an amazing array of competitive intelligence is displayed within easy reach.  So many things that you just had to know how to do before Aaron now takes care of for you — and there are many tools it reveals that I bet you didn’t know even existed.

And don’t be misled by the “SEO” label.  This is way more than just an SEO toolbar.  If you’re into website buying and selling, for instance, having all your in-depth analysis tools in one place would probably save you a ton of time.

Take a look and let me know if you like it as much as I do.

There are many skills that you can make a living online with — there’s no magic combination — so I think I’ve answered most often that you should just try out several different things and see which you like and are the best at.

However, I have realized that there is indeed one skill that I would recommend over all others — all other things being equal — because it’s both enormously valuable and more difficult to outsource than anything else.  So let me go through the skills that I’ve needed in my own path to making a living online and discuss each in terms of how valuable I think it is.  I’ve listed them in order of increasing value.

Valuable Skills

Pay-Per-Click

This is a really great skill that you can make some very real cash with — both directly and indirectly — but as adept as I was with AdWords, it hasn’t contributed directly to my ability to live online at all.  If you’re good at it and you like it, by all means pursue it, but it’s just not a skill that I personally would rate above these others.

Web Design

Until recently, this was hands-down the one skill I don’t have that I wish I did.  I’m really good at just about everything else I’ve needed, so if I could design my own stuff I’d be wholly self-sufficient and not have to rely on anyone else.

In terms of picking just one skill to have, though, I’d go with something else simply because there are so many really good designers out there who will work very cheaply.  And with the advent of sites like 99designs that give us access to quality designers all over the world, the cost for good design has dropped like a rock over the past few years.

True, the cost for great design hasn’t changed — the upper echelon of designers can still command a premium price — but how many of us really need great design?  In almost all cases, good design is plenty good enough.

Web Server Configuration/Database Management

These are definitely skills that are useful to have, but the bar is pretty low.  Good web hosts make these functions easy, so if you can just handle the basics that may be all you really need.  Being an Apache or MySQL expert isn’t going to provide much direct value, especially when viewed in light of how long it takes to become an expert.

Programming

Being conversant in a particular web language is definitely useful, and it definitely opens up opportunities that you wouldn’t otherwise have.  However, it’s definitely not necessary, and many simple programming tasks can be accomplished by just copying and pasting code, without any knowledge of exactly what’s going on.  True, you would struggle getting software like Pligg up and running without a good knowledge of PHP, but how many of us have to use something like that?

Copywriting

An ability to write great copy can make the difference between a great site and one that never takes off at all.  There are several reasons why I don’t rank it any higher than I do, though.

First, my feeling is while it’s definitely a skill you can work on, you’re largely either born with it or you’re not.  I also don’t think you could achieve wild success with nothing else but the ability to write great copy.  Add in the fact that great writers are more and more in abundance and available for hire for a very reasonable price, and this is one of those skills that’s great to have and can definitely be leveraged but one that I wouldn’t choose if I could only choose one.

HTML/CSS

If you’re wanting to find success on the web, you’re almost certainly going to have to have some level of HTML & CSS knowledge.  You need to know your way around.  Definitely get a good book and learn the basics, but you don’t have to be an expert.

Having this as your only skill isn’t going to take you far.  You’ll always be working for someone else.

SEO

SEO has factored into my success in a huge way — more than was healthy, in fact.  While it’s not the end-all-be-all, you could definitely be quite successful with nothing more than this skill because there are still so few people who are truly good at it.  (On the other hand, you can’t swing a stick without hitting someone who thinks they’re really good.)

Still, it’s possible to find someone to get your site optimized — for a fair price — and spend your time focusing on other things.  Plus, search engines are still only a small fraction of the available traffic out there.  Many sites do great without ever even seeing any meaningful search engine traffic.

If this is something you want to explore, I would definitely recommend Aaron’s training program.

Revenue Generation

You can have the best site on the best topic with 10 times the traffic of your closest competitor and still fail miserably if you have no idea how to generate revenue.  Nobody gets rich by just making change.

But trying to generate revenue with a site that gets great traffic is like Tom Brady trying to get a date — it’s just not that hard to do.

Link Building

I’ve decided now that this is the one skill that I would choose over any other, because traffic is the lifeblood of any site.  Without it, a site dies.  And links not only send traffic directly, but they are also far and away the number one determinant of search engine rankings — which bring even more traffic.  Links make the world go round.

As long as I’m passable at the skills above and contract out to fill holes where I’m not, the ability to build links is like rocket fuel for my efforts.  The better I am at building links, the faster and higher I can go.  It, more than anything else, can be the differentiator between two otherwise similar sites.  It’s the publicity that is so vital to the success of any venture, and it can be far more efficient (and easier, and more long-lasting) than traditional offline PR.

And because it’s one of the rarest skills online, great link builders are both hard to find and expensive to hire — if they’re even available to be hired.  Most would much rather be contributing to their own success than being paid to contribute to someone else’s.  If you’re that valuable, why work on anything where you don’t have an equity stake?

All Other Things Being Equal…

I say “all other things being equal,” but the truth is they never are.  You’ll almost certainly find that you have propensities and desires for some of these skills over others, and you’ll find that success comes much easier if you focus on those.  Plus, this is based almost solely on my own personal experience, which by nature is limited, so it’s likely that you’d have a completely different list — both in terms of skills and in how you’d rank them.

So what do you think?  Do you agree with this list?  How would you change it?

If your site was deleted from the Google index would anyone other than you notice and care?

That was a quote from Aaron in “How Does the Algorithm View Your Website?“, and nothing has ever rang more true to me.

See, I had a site in the same mold as so many others that I had had success with.  It was a very easy model for making great money: find a site that fit a certain pattern, do a simple set of very easy things, and then watch traffic shoot up dramatically — all legit and all totally what Google was looking for.

Except for one thing.

A few months ago, the site had its rankings dropped dramatically.  Traffic dropped by 50% literally overnight.  The model no longer worked.  What happened?

Well I still don’t know the answer to that, but here’s what I do know: it forced me to take a long honest look at my site and admit that — although I had known how to get Google to rank it highly — it didn’t actually deserve to be there.  It certainly wasn’t the best site for all those queries, so I had no grounds for complaining or for going to Google and asking what had happened.  The run was over.

Funny thing was, I was always the one that preached quality and preached not building a business on Google traffic.  I totally believed that (and still do), but I was saying one thing and doing something different.  It’s the difference between head knowledge and heart knowledge.

Yes, you can have success with tricks — with something other than creating and marketing something truly valuable, something truly worthwhile.  Know that you’re always on thin ice if you choose to do that, though.  It’s very much a day-to-day strategy — not one that you can rely on for any sort of long-term security.

Maybe you’re okay with that.  Maybe you’re fine knowing that you could wake up and find it all gone tomorrow.

I’m not.  That’s why you hear me preach against shortcuts and tricks and “gurus.”  But no one’s immune from the draw of an easy buck — least of all me.  Just wanted you to know that I have to work at it, too.

The Key: Quality Over Quantity

In the long run, quality beats quantity every time.  That’s the key to highly successful SEO.  Yes, you still have to take care of SEO basics, and it’s not an absolute rule, but it’s immeasurably easier to rank a site that deserves to be ranked than it is to trick Google into ranking one that doesn’t.

Forget the shortcuts.  Forget the tricks.  Build something of value and then work on your SEO.  Then you’ll be one of those guys who thinks SEO is really easy

Original photo by mamamusings.

Here’s why.

For at least some industries and/or keywords, the top spots are reserved for those who are paying to be there.  Yahoo! provides this helpful illustration:

What they don’t tell you, though, is that there are actually three tiers of rankings within their “Search Submit and other results” section: Search Submit Pro, Search Submit Basic, and free organic results.  Those break down something like this:

(Important Disclaimer: I do not know whether Yahoo!’s example search of “Flowers” actually uses the three-tier system, so I definitely don’t know which results are in which tiers.  I’m only using this image to illustrate the tiers.  I have seen clear evidence of the three-tier system on two very major sites in completely different industries, but I’m not at liberty to reveal who they are.)

Within each tier, the results appear to be algorithmically ranked, just as they would be if there was no tier system.

It’s possible that Yahoo!’s three-tier system is in place only in certain industries and/or for certain keywords.  For some sites, paid inclusion makes a dramatic difference.  For others, it makes no difference at all.  I don’t know if that’s because Yahoo! only uses the three-tier system for select niches, because there are little to no businesses using Search Submit in many niches, or some other reason.  The only way to tell if it will make a difference for you is to apply for the program and see.

The first thing I found was that he definitely has the Internet Marketing Hype Meter turned all the way up to 11 — as much as any other site I’ve ever seen. That made me even more confident that, despite claims to reveal the “truth” of what we “should really be doing” doing to rank well in Google, this was going to be a complete waste of time.

However, after wading through everything and finally downloading the e-book, I was surprised to find something that actually was well worth reading. Not only does he take on 7 genuine “truths” that you hear regularly about Google, he does a great job of debunking them with real evidence. I don’t agree with everything he says, but all in all this is a great resource and I definitely recommend it. (Which is one reason I hate seeing it wrapped in all the stereotypical Internet Marketing trappings. I think he’s keeping himself out of a much bigger market that way.)

$150/Month

The myths he proves wrong, though, weren’t the only thing interesting to me. Instead, what really stuck with me was the section where he gave lots of stats about a niche site he had built, gotten ranked in Google, and started generating AdSense revenue all in just a matter of a few months.

What caught my eye specifically was how proud he was that this site earned him $152.36 in December — so proud in fact that he highlighted it in yellow so you wouldn’t miss it.

$150? Seriously? You’d have to do 20 of those sites to be making any real revenue, and even then very few of us could quit our day jobs on that. I wasn’t impressed.

As so often happens, though, I started wondering if I was underestimating just how impressive that was. After all, it only took him 5 hours to build that site, and it generated him $372.50 in 2007. That’s $74.50/hour, and I bet there are lots of people who would be willing to work all day long for that. That’s good money.

Alright, so maybe I was wrong. It was sounding like he might be on to something after all.

$111.70/Hour

So my next thought was, “I wonder how much I made per hour last year.” I knew 2007 had been a great year, but I had never sat down to actually calculate how much I earned as a function of how many hours I worked.

I have a variety of revenue sources, making it hard to pull one total number, so I just pulled one of last year’s best-performing sites and used the stats from it. It’s a site that I actually own only a fraction of, but I figured it still would be a good site to compare to the one in the e-book.

First, I had to figure out how many hours I worked on the site. I’m always hopping back and forth between a variety of projects so it’s impossible to get an exact number, but I ballparked it at about 40 hours/month or 480 hours for the year.

Next, I had to add up my share of the profits for the year. That came to $53,615.01 or $111.70/hour — more than the site in the e-book, but then my profit was for the entire year and his was only for August through December. Had his site been live all year, that obviously would have raised his effective hourly rate quite a bit and almost certainly put it above mine.

There was a much greater source of earnings that we had not yet factored in, though.

The Missing Component

As I alluded to in the blueprint, your greatest value comes not from your monthly profits, but from the equity that you build up in the business. That’s because for every dollar that you add in monthly profit, the value of the business increases by some multiple of that. In other words, if you add $100 to your bottom line, you’re not only earning an extra $100 every month, but the value of the business has risen by several times that.

And that’s where financial independence comes from. You can either save up your profits until you have enough where you can live off of the interest that your savings are generating, or you can focus on building equity in your business and unlock it all at once by selling the site somewhere down the line. The first method will take 10 years or more depending on how disciplined you are (often much more), but the second only takes a fraction of that.

The other thing to remember, though, is that different types of businesses have much different multiples. Innophos Holdings, for example, has a price-to-earnings ratio of 12,320. In other words, investors are willing to pay more than 12,000 times Innophos’ profit. I didn’t look to see why, but suffice it to say that you and I will never anywhere near that sort of multiple

(It would probably be helpful here to take a look at How to: Build an Affiliate Site You Can Sell for $1M, if you haven’t seen it already, for a more in-depth discussion as to why multiples vary so widely.)

The Actual Hourly Rates

So to calculate the actual effective hourly rates, we have to factor in not only how much profit was generated, but also how much the value of the business increased.

Let’s assume a generous 2X yearly earnings valuation for the site in the e-book. (I think it would be closer to 6 or 12 months, and I’m not sure how many people would be willing to even buy a site that only makes $150/month, but 2X will still give us a good number to compare to.) Let’s also give him credit for a full year’s worth of $150 months rather than just a partial year.

That would put his annual earnings at $1,800 (12 months X $150/month) and the value of his site increased by $3,600 (2 X $1,800). That means he earned an effective rate of $1,080/hour ($5,400 / 5 hours) — much different than the $74.50/hour we calculated previously, and very much a worthwhile effort.

How about my site? Well my share of the profits, as we’ve already seen, was $53,615.01. However, we know already that we’re looking at at least a 10X multiple when we sell our site. Using that multiple, my share of the increase in value of the site was $1,320,000, for an effective hourly rate of $1,486.70 — 38% higher than his.

What’s the Point?

Looking at those two numbers, it probably seems like we’re arguing about the difference between a Ferrari and a Maserati doesn’t it? Wouldn’t you be plenty happy with either one?

I would

What I want you to see is this, though: the vast majority of your earnings aren’t unlocked until you sell the site. He earned $1,080/hour only if he manages to sell what he built. Otherwise, he only earned $360/hour. That’s a huge difference. It’s like buying a Ferrari for your grandmother to drive back and forth to church on Sunday — you’re wasting so much of the value.

We need to be focused just as much on our liquidity event (the point at which all our equity gets turned into cash) as we are on monthly profits.

Said another way: if you’re not building a site that someone else will buy somewhere down the road for a really good multiple, you’re just stealing money from yourself.

I think it’s a great idea to start out with sites like the one in the e-book just to get a feel for everything and to get your feet under you, but that’s only the beginning. The real value lies in taking what you’ve learned there and focusing it on just a few high-multiple sites that you can eventually sell to a larger company. That’s where the real money is.

We used to have stuff like that happen all the time, though, so I understand. You don’t notice the title tags very often on any site, much less yours, so how long would it take you to realize that you had a problem?