Management

Do your sums before you jump

“I never made a mistake in my life; at least, never one that I couldn’t explain away afterwards.” ― from Under The Deodars, by Rudyard Kipling

For those of you who have not followed my articles I will introduce Matt Cutts again.

Before Google he worked on a PhD in computer graphics. He has a string of degrees in mathematics and computer science and after joining Google some 13 years ago wrote the first version of SafeSearch, Google’s family filter; he is currently the head of Search Quality and Webspam.

I am prompted to write this article because of a comment made by a client. He spends $300 per month on pay-per-click advertising with Google but is unsure what benefit it brings. Well, I don’t have a degree in mathematics but if your letting commission is 10% then you would have to increase your bookings income to the tune of $3000 to break even. Staying simple, that equates to 10 extra bookings per month just to recover your outlay from a room rate of $300 per night. And that is probably somewhere in the averages ball park. So what has Matt Cutts to do with all this?

In the latest Webmaster Help video, Matt Cutts talks about SEO “myths”. He responds to this question: What are some of the biggest SEO myths you see still being repeated (either at conferences or in blogs, etc.)?

So let me quote from a transcript. There are a lot of them, he says.

“One of the biggest, that we always hear,” he says, “is if you buy ads, you’ll rank higher on Google and then there’s an opposing conspiracy theory, which is, if you don’t buy ads, you’ll rank better on Google. We sort of feel like we should get those two conspiracy camps together and let them fight it all out, and then whoever emerges from one room, we can just debunk that one conspiracy theory. There’s a related conspiracy theory or myth that is that Google makes its changes to try to drive people to buy ads, and having worked in the search quality group, and working at Google for over 13 years, I can say, here’s the mental model you need to understand why Google does what it does in the search results. We want to return really good search results to users so that they’re happy, so that they’ll keep coming back. That’s basically it. Happy users are loyal users and so if we give them a good experience on one search, they’ll think about using us the next time they have an information need, and then along the way, if somebody clicks on ads, that’s great, but we’re not gonna [sic] make an algorithmic change to try to drive people to buy ads. If you buy ads, it’s not going to algorithmically help your ranking in any way, and likewise it’s not going to hurt your ranking if you buy ads.”

Cutts continues with another “myth”: “I would say, just in general, thinking about the various black hat forums and webmaster discussion boards, never be afraid to think for yourself. It’s often the case that I’ll see people get into kind of a ‘group think’ and they decide, ‘Ah ha! Now we know that submitting our articles to these article directories is going to be the best way to rank number one’. And then six months later, they’ll be like, ‘OK, guest blogging! This is totally it. If you’re guest blogging, you’re gonna go up to number one’ and a few months before that, ‘Oh, link wheels. You gotta have link wheels if you’re gonna rank number one’ and it’s almost like fad.”

To be fair, some of this “group think” stuff has worked for some sites in the past until Google changed its algorithm to stop them from working.

He suggests that if somebody really had a “foolproof” way to make money online, they’d probably use it to make money rather than putting it in an ebook or tool, and selling it to people.

“The idea that you’re going to be able to buy some software package and solve every single problem you’ve ever had is probably a little bit of a bad idea,” he says. “It’s kind of interesting how a lot of people just assume Google’s thinking about nothing but the money as far as our search quality and, truthfully, we’re just thinking about how do we make our search results better,” he says.

I am not trying to be cynical nor suggest Matt Cutts is insincere but rather find reality to be unavoidable. I have broached this aspect before

All what Matt Cutts says is interesting and useful but despite that we must remember that, to survive, Google has to make money on a large scale no matter what. They do have shareholders who expect high returns and, as of 31 March 2014, they do have on a worldwide basis 49,829 full-time employees with 46,170 in Google and 3659 in Motorola Mobile.

They estimate that the current stock based compensation charges for grants to Google employees prior to 31 March 2014 to be approximately $3.22 billion for 2014. Because of these generous employee schemes many employees who have been with Google since day one are multi-multi millionaires in their own right now, including a now retired part-time masseuse. I am sure they have also earned it!

All this illustrates the magnitude of the operation and some employee awards that in my mind are impossible to scale. But with just these figures alone it demonstrates that Google must try and generate very substantial incomes regardless of any other considerations.

So should I be cynical and take Mr Cutts to task on this issue alone or remind you that you all strive to make as big a profit as possible? The undefeatable fact is that you operate in a town or relatively small district but must never forget your competition is in your town and not the rest of the world. Your locale is what generates the influx of tourists rather than imaginary masses having a burning desire to enjoy your offerings and rushing to your doorstep. So by this logic how effective is your Google advertising at $300 or whatever other amount per month?

I will let you do your own analysis of their impressive accounts. Google’s’ financial report is available in full on line. For those of you who are curious a study has pegged Google’s Australian revenue at almost $1.74 billion, with mobile search advertising on smartphones and tablets tipped to rise significantly. New Zealand, however, is reported to run at a small loss.

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