Perry Marshall's take on Google versus Overture

(This is an interesting letter from Perry Marshall- and suprisingly true for an affiliate letter).

Also read the book "Search" available on Amazon.

Russell,

A few weeks ago, a Very Large Wall Street Investment Firm with many hundreds of millions of dollars invested in Yahoo and Google called me to schedule a consultation.

They wanted me to help them understand 'How the sausage is made' and share my views on Google and Yahoo's long-term prospects for growth.

Back in the day, GoTo (oops, I guess they're called Overture now) (Oops, I guess they're called Yahoo Search Marketing now) had the tiger by the tail.

They built the world's first Pay Per Click money machine and they had it made in the shade. They organized all the chaos of the Internet and started selling clicks. Now search engines could finally start making some money.

And baby, did they ever make money. They thought they were making a lot.

But then Google came along. Google showed 'em how it should REALLY be done. I'm not sure any company in the history of the world has ever made so much with such apparent ease.

You can ask any guy on the street why Google has done so much better, and they'll tell you it's 'cuz Google is just a better search engine. And that's true, but that's only half the story.

The other half of the story is that they designed AdWords to maximize the amount of money they make on every search. Advertisers have great incentive to lure people from the left side of the page to the right side and click on those paid ads.

And yes, this has a LOT to do with you, as I shall explain shortly. If you're going to succeed in this game, you're going to succeed for the exact same reasons Google succeeded. So pay close attention as I tell you what I told the guys at the big investment firm.

You may know that Yahoo just changed the size of their ads from 190 lines of description to 70, just like Google.

Know why they did that?

Because Google figured out before Yahoo did that they'll make more money showing 10 little ads than

3 or 4 big ones. Yahoo finally figured it out too.

How did Google know that?

By testing.

Yahoo didn't test.

Shame on Yahoo. (Shame on everyone who doesn't test, for they shall share the same fate.)

Well then there's the Click Thru Rate formula. You should know by now that Google multiplies your bid price times your click thru rate to figure out where you belong on the page. Yahoo doesn't do that. Which means Yahoo ads that get clicks don't rise to the top, and Yahoo makes less $ from every single search than Google.

Now let's say they make 10% less. Does that mean they get 10% less business? NO, it's worse than that.

Because they have syndication partners (MSN, Altavista

etc.) and thousands of individual sites who share the profit.

If their partners get a piece of the action, they make 10% less too. Which means they'd rather run Google ads than Yahoo ads. Which means Google gets more clicks and Yahoo gets less. The 10% disadvantage becomes 25%.

But it gets still worse. Because if you've got 25% less traffic, advertisers are 25% less interested which means there's fewer of them. So the bids are lower and now you're 40% behind not 10%.

In the real world of business, 10% is really 40%.

(You should write that on a piece of paper in big fat magic marker and tape it to your wall.)

I'm not done yet. Yahoo's software is 5 years old, it's clunky and horribly bureaucratic. Every time you want to change something it takes 3 days and it's a nightmare.

I told my friends who manage those hundreds of millions of dollars that heads should have been rolling at Yahoo a LONG time ago. Because... this should not be news to anybody!

Heck, I knew this 3 years ago, back when Overture was still ahead of Google.

Sad. Very sad.

To our friends at Yahoo Search Marketing - who will no doubt see this email - I say: You better accelerate your plans to fix your stupid broken system, because you're losing ground every single day.

I say this as someone who has not the slightest interest in the Wall Street side of this equation. I own no Google stock (that would create a conflict of interest, given the work I do). I own no Yahoo stock. What I'm interested in me and my customers getting the most bang for our advertising buck. And I know that pressure from Wall Street just makes it tougher on advertisers.

Plus I'd like there to be at least one company besides Google who doesn't have their head stuffed in a cloud. I want just ONE good PPC alternative to Google. How about you?

(Need I mention that MSN has a program in Beta right now? Yahoo, you'd better watch out, Bill Gates is coming to plunder your house.)

OK, all this Wall Street stuff is fine for analysts and pundits.

But Russell, what does this have to do with YOU?

A LOT.

The lesson here is: 10% is really 40%. 20% is really 100%.

Because there's always a feedback loop. What goes around comes around. How effectively you use every single click on your Google ads, your website, your emails, your upsells...

How well you're able to pay your affiliates or JV partners - multiplies and multiplies. On tiny hinges, big doors swing.

A 10% improvement on your sales page today may very well be the difference between you being #1 or #2 in your market 1 year from now, or being totally out of business.

I am not exaggerating.

And folks, we can all point fingers at Yahoo for being #2 instead of #1. That's easy to do. Next weekend at the Super Bowl, the winner will take it all and the loser will slink away in shame.

But this is your website and your business, and you're not an armchair quarterback. You are THE quarterback.

Woe be unto you if you fail to apply to your own business the lesson that Yahoo is learning right now - that every one of those clicks count, and they don't just add up, they multiply.

This whole game of web marketing can seem pretty complex, which is why I've added an entire module to my April seminar. Every student who comes to my seminar will get to pick one of my expert speakers and spend an uninterrupted 2 hours with that expert in a small group mastermind session.

You'll have a chance to show him or her exactly what you're doing in your business and they'll pinpoint exactly where you may be stuck, or where the next breakthrough is going to come in your business. Their moxie will rub off on you.

When you get home, you're not just going to walk into your house with a warm fuzzy feeling and a yellow notepad full of great ideas.

No. By the time you get home, you're already going to have tangible results and an already-improved business:

I hope to see you in April!

Perry Marshall

Perry S. Marshall & Associates

1131 Lake St #295 | Oak Park IL 60301 USA