The appearance of a business vs. a REAL business
Bill McClure, founder of www.Coffee.org is a serial online entrepreneur, going all the way back to eFlowers.com and FlowersDirect.com which he sold in ’02. He’s also a Roundtable member.
When Bill investigated the coffee market, he considered several existing websites that were available for sale.
One of them was doing $3 million per year in sales with a tiny staff and strong profitability. On paper, it was a superb business.
Only two problems:
1) Almost all the traffic was from free organic “Search Engine Optimization” traffic. The left side of Google.
Now that SOUNDS really great. Free traffic from Google? Great SEO? What’s not to like about that?
The problem with it is, what happens when the free traffic goes away?
Notice that I said “when” it goes away not “if” it goes away. It’s an eventuality that there’ll be some Google Dance and one sad morning, the guy’s showing up on page 6 of Google instead of page 1.
The traffic dries up and suddenly a $3M business becomes a $300K business.
2) There was no benchmark of being able to buy traffic AT WILL (i.e. with paid advertising) and make convert to sales profitably.
Which is to say:
That business, even though on paper it was worth several million dollars, was not even a real business. It was built on the availability of free customers – which is a foundation of sand. Temporary success at best.
(As a matter of fact the owner was afraid to even TOUCH the website, which was clearly out of date – because he was afraid changing something might ruin his great SEO rankings.)
If your business is dependent on free customers, you do not have a business. You do not have any kind of “real” business until you have the ability to buy advertising from a variety of available sources and transform that traffic into sales and profits.
Instead Bill bought the domain Coffee.org and in cooperation with my other Mastermind members, is building it into a traffic conversion machine and an established brand (Miss Elly’s Coffee – a southern twist on America’s favorite morning beverage).
The kicker is, once you have solved the conversion puzzle, ALL forms of qualified traffic convert. You dominate your market in multiple dimensions and you become nearly impossible to displace by other competitors. You are feared in your market. A force to reckon with.
Bill is feared in several markets, not just coffee. Once you’ve mastered this in one market, you can take it to others.
If you’re a serial entrepreneur like Bill you will undoubtedly enjoy Roundtable and the 2-day 4-man Intensive. You’ll almost always meet one or two other serial entrepreneurs like yourself, and most people report that they learned more from the other members’ hot seats than their own. Because questions got raised that they themselves would’ve never thought to ask.
Unexpected discoveries that come from surprising places. Discoveries that make your website scream.
Join me in just 2 weeks: http://www.4manIntensive.com
Perry Marshall
About the Author
Entrepreneur Magazine says: "Perry Marshall is the #1 author and world's most-quoted consultant on Google Advertising. He has helped over 100,000 advertisers save literally billions of dollars in Adwords stupidity tax."
He is referenced across the Internet and by The Washington Post, USA Today, and the Chicago Tribune.
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I must be a little thick: I just don’t get the concern about the value of the coffee company being based on free traffic going away when google does the google dance. I’ve been following you for a couple years now, and several times I’ve heard the sirens go off when Google does the dance to paid advertisers or to free placements.
As to the founder being afraid to touch his site… isn’t that the point of testing?
I’m sure you and your friend bill are much smarter than me, so explain it to me like I’m a 4th grader.
Evan,
Almost all of their business came from free SEO traffic. Which the owner has no direct control of. That’s the blessing and the bane at the same time: You have no control of it when it’s sending you traffic; and you have no control of it when it decides not to send you traffic.
When the free traffic goes away, the business literally dies. With no recourse.
As to testing: It’s not impossible to do split testing with static SEO pages but it’s difficult at best. There’s a chance that if he installs server side scripts to do testing on his pages he’ll lose his rankings. It’s much easier and safer to test with paid traffic than with free.
Maybe he’ll lose his SEO rankings if he tests and maybe he won’t, but the point is, he doesn’t know; he can’t know until he tries; and he’s afraid to find out because he’s got much more to lose than to gain.
The fact that he can’t test with paid traffic is the symptom of the root problem.
A very, very fragile business.
Perry Marshall
Yes, but I think the point is that google ‘dance’ also applies to paid traffic. I saw a profitable product ($1 ad spend = $4 profit) become unprofitable over a fairly short period, as Google did their best to ensure they toom away most of my profit… change of rules; minimum bids etc.
The moral is ‘do not let your business depend on google’
I tend to disagree. Once you become an authority site for your particular keyword you don’t go to page 6 unless you piss off Google. Coffee.org could be a good authority site if they tried to but they don’t (notice they have no content). Perry’s advice makes sense to small businesses who can never become an authority. But the point is, create a storehouse of objective, reliable content, become an authority in your niche, and you are guaranteed to remain in good standing on the free side for years.
Coffee.org bought a domain version of Peet’s Coffee! Try going to Coffee.com
Stealing Peet’s business isn’t something that should be praised. It’s cybersquatting. What a scam!!
Gabri,
I couldn’t disagree more.
Peet’s happens to own coffee.com. They don’t have any special claim on the word “coffee”, much less coffee.org; They have done nothing to develop coffee.com into a website or brand, they just redirect it to their peets.com website.
Bill, on the other hand, has developed coffee.org into a real business and brand.
Peet’s is the cybersquatter. Not Bill!
Perry Marshall
Perry,
I respect your opinions and agree with a lot of what you say.
However, this post although true to some degree gives me pause.
I would love to hear your thoughts on this article by Aaron Wall: http://www.seobook.com/your-laziness-why-i-love-seo-so-much-more-ppc
Joel Ohman
Joel,
It’s no secret that an affiliate PPC business is something others can steal out from under you with the click of a mouse. That’s the whole theme of Jet Fuel for Google Cash (included in the $97 Definitive Guide).
This is not an issue of PPC vs. SEO per se. SEO *requires* you to have a website. So in that sense the affiliate pitch “make money without a website” falls flat as soon as SEO comes into play.
If you build an affiliate business the way I teach in Jet Fuel for Google Cash, it’s impossible for someone to just steal it from you and you can also do SEO just like Aaron advises.
If you want to dominate a market you need to be able to play both sides of the game. You need to be able to buy clicks and market price and turn them into profits and your site needs to be considered authoritative enough to merit free traffic.
Hi Perry,
Thank you very much for your reply. I have bought your Definitive Guide years ago and I just went ahead and sprung for the $97 updated version.
I am for the most part a pure SEO guy but I can certainly see the value that PPC can provide.
I like that you mention the importance of making a site authoritative especially with the increasing importance of a domain’s quality score.
Thanks Again! – Joel
PS We also just built a new tool and put it up on our beta dashboard at DomainSuperstar.com that will let you paste in or upload a list of keywords and then the tool will automatically check for the availability of domain names that match exactly to any of the keywords. This way it can be an added benefit for your AdWords quality score if you can set up your landing page on a domain name that matches exactly to the keyword phrase you are bidding on. The $8 to register the domain name for the year should more than pay for itself in decreased CPC. I would love to see your input on this Bulk Keyword Domain Checker tool and then also our most popular Type In Traffic Finder tool which uses real time data from the Google Adwords Keyword Tool to find available keyword domain names.