The Death of Google Adsense And Other Myths

By Titus Hoskins (c) 2006

Recent changes in the Google Adsense program has many online website owners and marketers seriously concerned. Many have seen their Adsense profíts and income flatline... seen their four or five figure monthly Adsense income disappear overnight. For many the Google Adsense bubble has burst.

What happened?

First, Google made a change in its Adsense program, letting advertisers choose between putting their ads in the search results or on the content pages of Adsense publishers. Search won out and started to receive the higher bids. Search results convert better than content ads.

Next, Google has cracked down on Junk Adsense sites, like they should. These sites consisted mainly of software generated re-hashed search engine links and were totally annoying to say the least. But Google also cracked down on 'squeeze pages' or 'affilíate landing pages' - a lucrative source of income for many online marketers, mainly because these pages helped marketers build an opt-ín list or use permission based email.

The results of these changes produced an Adsense meltdown for many online marketers.

Some Internet marketers are speculating recent changes could even mean the death of Adsense. One online marketer, Scott Boulch even published a free report entitled 'The Death of Adsense".

Many affilíate marketers would agree with Boulch on some of his points, especially the obvious fact that using Adsense on your web content is starting on the bottom rung of the online marketing ladder. Instead of receiving pennies per clíck with Adsense, alert marketers and webmasters have already discovered that by using CPA (Cost-Per-Action) and direct affilíate links, they can produce significantly more revenue from their web pages. Why eärn pennies per clíck when you can eärn $5, $10 or OVER $100 per clíck?

But the fine people at Google are catching on...

In the past Google has made its own swing to the Cost-Per-Action direction with its referral system for the Firefox Browser and giving webmasters credít for signing up Adwords and Adsense accounts.

Many online marketers believe Google needs to expand on these baby steps and open their Adsense affilíate program up to third party products/advertisers. In a recent company statement Google offered some hope: "We're always looking for new ways to provide effective and useful features to advertisers, publishers, and users," the company stated "As part of these efforts we are currently testing a cost-per-action (CPA) pricing model to give advertisers more flexibility and provide publishers another way to eärn revenue through AdSense." Basically, in cost-per-action, advertisers pay for leads, purchases or customer acquisition. It would help with the clíck fraud issue and the monetary returns could potentially make Adsense's revenues pale in comparison.

As more and more commerce goes online... acquiring customers for such diverse services as ínsurance, real estate, telephone, marketing, web hostíng, travel, mörtgage loans, cable TV, banking... you name it, almost any service or product sold in the marketplace is now turning to the Internet for customers and lifelong clients.

Enormous sums of monëy will change hands. Perhaps, the most lucrative of these is customer acquisition. Advertisers are turning to the Internet and webmasters/marketers for acquiring these lifelong customers for their respective services and products. Businesses and companies are quickly realizing paying an attractive lead generating fee/commission is smart business. They quickly build a client base for their services or products and quickly recoup their expenses - realizing in the long run these leads will generate huge profíts.

It can also mean huge profíts for the CPA networks like ValueClick's Commission Junction and Rakuten's LinkShare who supply the advertisers with publishers and website marketers to harvest these leads. It can be a lucrative venture for all involved, especially for those online marketers who have cornered the search engines for lucrative niche markets in big ticket items. Even small ticket items pay quite well for those marketers who know how to market online.

Contextual advertising is fine, but CPA (Cost-Per-Action) will offer much better returns for the website owner. Making any profitable site much more profitable. It will and is opening up a whole area of marketing opportunities that nevër existed before we had the Internet. Creating a complex structure of advertisers, publishers and the Affilíate/CPA companies that connect the two.

Of course, cutting out the middle man has always been even a more profitable venture for most marketers. As more and more webmasters realize they can make much more with dealing directly with companies, rather than going through a middle process like Google Adsense or the countless other affilíate/CPA networks ... online marketers can reap even bigger rewards.

For an online marketer when you get a telephone call or email from the CEO or the affilíate manager with a company or service you're promoting with your website - you know you have made it! Dealing directly with a company usually means bigger commissions and special exclusive deals just for you or your sites.

Only fly in the ointment, all that extra paperwork and business wheeling and dealing. Many marketers and website owners like the idea of someone else handling all the tracking, collecting payments, promotional materials... they just like to sit back and build more websites and content. It gives the affilíate marketer a lifestyle that they are looking for on the web. They just like to market and promote with their sites and let someone else worry about the details. Therefore, there will always be a place for contextual ads like Google Adsense... "Rumors of my demise have been greatly exaggerated."

However, could CPA be a better alternative for the current Adsense contextual ads?

Google would be the natural choice for a middleman if there ever was one. Besides, many savvy marketers know the Google brand name is trusted online, any product/service promoted through Google would be an easy sell. Many argue Google already dominates the web, why should it not be the one to handle these CPA transactions through its Adsense program.

On the flip side, over countless updates and changes to its indexing, many webmasters have experienced more than a few negative dealings with Google. Many have won, many have lost in this Google Age, but all have realized riding the Google Search Engine is like running with the bulls at Pamplona, totally thrilling unless you're one of the unfortunate few who get trampled in the process.

---

About The Author:

Titus Hoskins is a former teacher who now works full-time online operating numerous websites, including two sites on Internet marketing. For the latest web marketing tools try: http://www.bizwaremagic.com. For the lastest trade information in your own industry try: http://bizwaremagic.tradepub.com.
2006 Titus Hoskins. This article may be freely distributed if this resource box stays attached.

Outsourcing Marketing

by Gail McGovern and John Quelch

Companies have long outsourced creative, right-brain marketing activities, such as advertising and promotion campaigns. But a fundamental change is under way: Increasingly, firms are farming out marketing operations and analytics as well. A Forrester Research survey of 650 B2B marketing executives found that 53% aimed to outsource more than half their marketing activities in 2004. Forrester projects that CRM outsourcing in the United States will quadruple to $4.6 billion by 2008. And the British firm Astron Group forecasts that customer database and lead management outsourcing is growing 10% annually. What’s going on?

We believe there are two key reasons for this trend: First, outsourcing can save money and improve quality. American Express’s consolidation of customer service call center operations in India, for example, cut service costs per customer by 20% to 30% while improving response time and boosting the percentage of satisfied customers by 20 points.
Second, outsourcing can provide increasingly critical left-brain marketing expertise that many companies lack, such as customer database management and analysis. When Sony, a legendary marketer, wanted to build a customer database, sell services, and market new, high-end products through its online store, Sony Style, it outsourced the program, recognizing that it didn’t have the required skills in-house. Allstate has outsourced lead management, which has doubled the leads each agent gets. Ericsson has outsourced the management of its extranet, which provides the sales force with up-to-date customer information and allows direct communication with selected customers.
American Express now outsources its data mining to specialist third-party firms that can process millions of transactions a day to reveal purchasing patterns and other aspects of consumer behavior. And Best Buy, the electronics retailer, is outsourcing not just database management but also marketing analyses and the complete execution of the marketing programs for two of its six segments—business and high-end customers.
The need for left-brain marketing expertise, we think, will only grow. A discipline that was once principally creative has become increasingly analytic, as the old workhorses—print and television advertising, and direct mail—become less and less effective. Marketing managers tend to be right-brain creatives with a fondness for mass-marketing campaigns when what’s needed are left-brain number crunchers who zero in on the “market of one.” Today, computer models optimize the allocation of pharmaceutical sales representatives’ time, determining which customers to address and which products to promote to achieve the greatest return. Dynamic pricing models allow airlines to change ticket prices in real time based on the number of seats sold on a given flight. And IT-intensive database management now lets companies precisely target just the right messages to just the right customers in just the right terms.
While many things, from customer call centers to pricing-elasticity studies and sales force deployment models, can be outsourced, some aspects of marketing can’t: those that directly drive marketing strategy. The CEO and top management team must regularly spend face time with customers and end consumers and drive this customer-focused culture throughout the organization. A chief marketing officer should be appointed to lead the marketing strategy, inject the customer perspective into new product development, and ensure that the company’s intangible brand assets are carefully stewarded. Major accounts must be served by sales and service teams that have been given the right incentives so that they can integrate themselves into those customer organizations and ensure the “stickiness” necessary for long-term relationships.
To create the most value from outsourcing, marketing managers must become expert ringmasters who cherry-pick, develop, and monitor an integrated network of outside suppliers that brings new capabilities to the marketing effort. Above all, management must start seeing its marketing suppliers not as contractors that need to be controlled but as partners that can create shared value over the long term.

Competent Jerks, Lovable Fools, and the Formation of Social Networks

New research shows that when people need help getting a job done, they’ll choose a congenial colleague over a more capable one. That has big implications for every organization—and not all of them are negative.

by Tiziana Casciaro and Miguel Sousa Lobo

One of management’s greatest challenges arises from a natural tension inherent in every organization. People are brought together because they have the variety of skills that, in concert, are needed to carry out a complex activity. But this variety inevitably leads to fragmentation of the organization into silos of specialized knowledge and activity.

It’s an understatement to say that resolving this tension is crucial to success in today’s knowledge-based and collaborative business environment. How do you ensure that relevant information gets transferred between two parts of an organization that have different cultures? How do you encourage people from units competing for scarce corporate resources to work together? How do you see to it that the value of a cross-functional team is more, not less, than the sum of its parts?

The answers to such questions lie not in an examination of organization charts but largely in an understanding of informal social networks and how they emerge. Certainly, organizations are designed to ensure that people interact in ways necessary to get their jobs done. But all kinds of work-related encounters and relationships exist that only partly reflect these purposefully designed structures. Even in the context of formal structures like cross-functional teams, informal relationships play a major role.

In this article, we offer somewhat surprising insights into how informal networks take shape in companies—that is, how people choose those they work with. We then discuss some of the benefits and drawbacks of this phenomenon and offer ways for managers to mitigate its negative effects and leverage the positive ones.

How We Choose Work Partners

When given the choice of whom to work with, people will pick one person over another for any number of reasons: the prestige of being associated with a star performer, for example, or the hope that spending time with a strategically placed superior will further their careers. But in most cases, people choose their work partners according to two criteria. One is competence at the job (Does Joe know what he’s doing?). The other is likability (Is Joe enjoyable to work with?). Obviously, both things matter. Less obvious is how much they matter—and exactly how they matter.

To gain some insight into these questions, we studied four organizations selected to reflect a wide range of attributes—for-profit and nonprofit, large and small, North American and European. We asked people to indicate how often they had work-related interactions with every other person in the organization. We then asked them to rate all the other people in the company in terms of how much they personally liked each one and how well each did his or her job. (For a more-detailed description of the studies, see the sidebar “Who Is Good? Who Is Liked?”)

Who Is Good? Who Is Liked?

These two criteria—competence and likability—combine to produce four archetypes: the competent jerk, who knows a lot but is unpleasant to deal with; the lovable fool, who doesn’t know much but is a delight to have around; the lovable star, who’s both smart and likable; and the incompetent jerk, who…well, that’s self-explanatory. These archetypes are caricatures, of course: Organizations usually—well, much of the time—weed out both the hopelessly incompetent and the socially clueless. Still, people in an organization can be roughly classified using a simple matrix. (Indeed, with relative ease you can probably populate the four boxes depicted in the exhibit “Whom Would You Choose?” with the names of people in your own company.)

Whom Would You Choose?

Our research showed (not surprisingly) that, no matter what kind of organization we studied, everybody wanted to work with the lovable star, and nobody wanted to work with the incompetent jerk. Things got a lot more interesting, though, when people faced the choice between competent jerks and lovable fools.

Design Thinking

Thinking like a designer can transform the way you develop products, services, processes—and even strategy.

by Tim Brown

Thomas Edison created the electric lightbulb and then wrapped an entire industry around it. The lightbulb is most often thought of as his signature invention, but Edison understood that the bulb was little more than a parlor trick without a system of electric power generation and transmission to make it truly useful. So he created that, too.
Thus Edison’s genius lay in his ability to conceive of a fully developed marketplace, not simply a discrete device. He was able to envision how people would want to use what he made, and he engineered toward that insight. He wasn’t always prescient (he originally believed the phonograph would be used mainly as a business machine for recording and replaying dictation), but he invariably gave great consideration to users’ needs and preferences.
Edison’s approach was an early example of what is now called “design thinking”—a methodology that imbues the full spectrum of innovation activities with a human-centered design ethos. By this I mean that innovation is powered by a thorough understanding, through direct observation, of what people want and need in their lives and what they like or dislike about the way particular products are made, packaged, marketed, sold, and supported.
Many people believe that Edison’s greatest invention was the modern R&D laboratory and methods of experimental investigation. Edison wasn’t a narrowly specialized scientist but a broad generalist with a shrewd business sense. In his Menlo Park, New Jersey, laboratory he surrounded himself with gifted tinkerers, improvisers, and experimenters. Indeed, he broke the mold of the “lone genius inventor” by creating a team-based approach to innovation. Although Edison biographers write of the camaraderie enjoyed by this merry band, the process also featured endless rounds of trial and error—the “99% perspiration” in Edison’s famous definition of genius. His approach was intended not to validate preconceived hypotheses but to help experimenters learn something new from each iterative stab. Innovation is hard work; Edison made it a profession that blended art, craft, science, business savvy, and an astute understanding of customers and markets.
Design thinking is a lineal descendant of that tradition. Put simply, it is a discipline that uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity. Like Edison’s painstaking innovation process, it often entails a great deal of perspiration.
I believe that design thinking has much to offer a business world in which most management ideas and best practices are freely available to be copied and exploited. Leaders now look to innovation as a principal source of differentiation and competitive advantage; they would do well to incorporate design thinking into all phases of the process.

Getting Beneath the Surface

Historically, design has been treated as a downstream step in the development process—the point where designers, who have played no earlier role in the substantive work of innovation, come along and put a beautiful wrapper around the idea. To be sure, this approach has stimulated market growth in many areas by making new products and technologies aesthetically attractive and therefore more desirable to consumers or by enhancing brand perception through smart, evocative advertising and communication strategies. During the latter half of the twentieth century design became an increasingly valuable competitive asset in, for example, the consumer electronics, automotive, and consumer packaged goods industries. But in most others it remained a late-stage add-on.
Now, however, rather than asking designers to make an already developed idea more attractive to consumers, companies are asking them to create ideas that better meet consumers’ needs and desires. The former role is tactical, and results in limited value creation; the latter is strategic, and leads to dramatic new forms of value.

How Local Companies Keep Multinationals at Bay

To win in the world’s fastest-growing markets, transnational giants have to compete with increasingly sophisticated homegrown champions. It isn’t easy.

by Arindam K. Bhattacharya and David C. Michael

Since the late 1970s, governments on every continent have allowed the winds of global competition to blow through their economies. As policy makers have lowered tariff barriers and permitted foreign investments, multinational companies have rushed into those countries. U.S., European, and Japanese giants, it initially appeared, would quickly overrun local rivals and grab the market for almost every product or service. After all, they possessed state-of-the-art technologies and products, enormous financial resources, powerful brands, and the world’s best management talent and systems. Poor nations such as Brazil, China, India, and Mexico, often under pressure from developed countries, let in transnational companies, but they did so slowly, almost reluctantly. They were convinced that global Goliaths would wipe out local enterprises in one fell swoop.

That hasn’t happened, according to our research. Over the past three years, we have been studying companies in 10 rapidly developing economies: Brazil, China, India, Indonesia, Malaysia, Mexico, Poland, Russia, Slovakia, and Thailand. In those countries, smart domestic enterprises are more than holding their own in the face of foreign competition. They have staved off challenges from multinational corporations in their core businesses, have become market leaders or are catching up with them, and have often seized new opportunities before foreign players could. Many of them dominate the market today not because of protectionist economic policies, but because of their strategies and execution. When we drew up a list of 50 homegrown champions, we found that 21 had revenues exceeding US$1 billion in 2006 and that the entire group’s sales had risen by about 50% between 2005 and 2006 (see the exhibit “Fifty Homegrown Champions”). The skeptics should have remembered that David slew Goliath—not the other way around.

Fifty Homegrown Champions

Consider a few local companies that have fended off foreign competition during the past five years or more:

• In Brazil, Grupo Positivo has a larger share of the PC market than either Dell or Hewlett-Packard, and Totvs is the enterprise resource planning (ERP) software leader in the small- and midsize-company market, ahead of the world’s largest business software provider, SAP.

• In China, daily use of the search engine Baidu exceeds that of Google China by fourfold; QQ, from instant-message leader Tencent, is ahead of MSN Messenger; and online travel service Ctrip has held off Travelsky, Expedia’s eLong.com, and Travelocity’s Zuji.com.

• In India, Bharti Airtel has taken on Hutchison Telecom, which sold its Indian operations to Vodafone in 2007, and emerged as the leader in the cellular telephone market.

• In Mexico, Grupo Elektra, which has created one of the country’s biggest retail networks, has taken the battle to Wal-Mart.

• In Russia, Wimm-Bill-Dann Foods is the biggest producer of dairy products, ahead of Danone and Coca-Cola.