A medieval infographic depicting a hierarchy-based social network.

Google Authorship is the newest initiative in search to emanate from the company. Currently, its impact is challenging to measure. There have been assurances from Eric Schmidt that “author rank” will have heavy future impact on search engine results. As many people have learned, when Google says it’s going to make a major change, it follows through. Billions of dollars in engineering and marketing spending can accomplish impressive feats. Part of Google’s motivation is implicitly to provide identity and ranking services to a global market.

The Wall Street Journal quoted Schmidt:

“Within search results, information tied to verified online profiles will be ranked higher than content without such verification, which will result in most users naturally clicking on the top (verified) results. The true cost of remaining anonymous, then, might be irrelevance.”

This differs from the previous methods that Google has used to determine search rankings, which have mostly gone around an arbitrary measure of page quality, number of quality links, and relevancy of page content to searchers. Google uses the credibility that it’s built through serving trillions of searches to act as the Papacy of the open web, deciding which conventions are sacred and which are sinful.

The majority of web operators are unprepared for the changes, because up until now, identity has remained tangential and fluid in publishing online content. Who you are hasn’t mattered nearly as much as what web pages are linking to you. Adapting to this change before it happens could mean the difference between profitability and bankruptcy for many  enterprises.

1. The New Web Will Look a Lot Like The Lost World of Old Media

Do you remember those starry-eyed publications from the mid-2000s, when Blogger and WordPress were new, and the internet was getting interesting again? One of the main conceits of the period was “Today, everyone’s a publisher.” At the time, Google had just gone public. Facebook only introduced the News Feed in 2006. Although cheap web publishing software was at least 10 years old by that time, it was during this period of rapid growth that often anonymous bloggers were starting to grow businesses to challenge the online operations of established newspapers and magazines.

A wave of small, often fly-by-night marketing firms arose to assist businesses of all sizes and scales to become publishers. Now, even local carpenters have blogs. Why? Because Google and Yelp put the Yellow Pages out of business.

However, this period of over-publishing is coming to an end. In a world in which Author Rank matters, the carpenter will be unlikely to out-rank the local real estate columnist at the online newspaper. Let this sink in for a little while, because it has massive implications.

The guy from Pakistan selling Canadian real estate leads to actual Canadian realtors thanks to his high ranking on the local SERP will be clobbered by the validated Author Rank of the local Canadian real estate columnist. If those realtors want to get placement, they’ll need to pay up for an ad, just like in ancient times.

While “today, everyone’s a publisher,” in the future, mostly publishers will be publishers, and it’ll be more economical for nonpublishers to rent space on the former’s web pages. In time, we’ll see the 2000s and early 201*s as a chaotic and temporary period of transition.

2. Google Will Escalate Its War On Aggregation

Google’s business incentive is to increase the value of its ad inventory. Publications that primarily exist to aggregate original reporting are like speed bumps for searchers. The searcher would be better served in most cases by finding the original report. Eventually, author rank will make it so that aggregators with mastery of manipulating keywords will be far less visible to the search robots.

In this way, Google can put economic pressure on the aggregators to either increase the value that they add or to go out of business. This ensures that a single piece of content is less likely to be republished infinitely across many different low value sites. It makes it so that more viewers are concentrated on fewer pages, which means higher ad rates for professional publishers online. Those higher ad rates mean more money for ad placement businesses like Google.

Again, none of this should be shocking or controversial to anyone who has worked in SEO for more than a few years. It’s probably a surprising to people who haven’t, however.

3. The Barriers to Winning an Audience Will Continue to Rise

Online distribution is increasingly becoming a money game. Facebook is charging for news feed distribution at higher rates. SEO is becoming an even more specialized practice. Interfacing properly with Google requires specialized publishing workers, more than ever before. Hiring outside agencies without knowing how to measure their effectiveness is becoming more risky than before. Interflora, along with many UK newspapers, were recently penalized for a paid link scheme.

Authorship is just Google’s latest attempt at developing a solution to the fact that policing PageRank effectively is too expensive for Google to achieve. Facebook and Twitter suffer similar policing issues. It boils down to the core economic problem with the ‘free’ web: free account creation makes publishing services vulnerable to abuse at scale. The arms race with black hats is expensive. Now that the dominant internet publishing platforms have achieved network effects, it’s time for them to shift towards charging for access.

Validating identities makes it so that getting 1,000 anonymous posts to link to your product sites suddenly becomes a useless or counterproductive strategy. Presumably, because validating identities will likely become expensive, spam will similarly become more expensive.

It turns out that that internet publishing “free lunch” was just a teaser promotion – a Groupon, if you will – for a more expensive array of paid services.

Conspiracy theories are my favorite fiction genre.

Some say that it’s a uniquely American genre of fiction. It’s also one with some of the most sincere fans who believe fervently in the stories, regardless of how well-substantiated they are. Hoary conspiracy theories become more well-established as communities form around discussing the hidden evils that cause personal pains.

Although not all of us are privileged enough to count the Rothschild family in our client lists,  it’s still possible to optimize your advertising to make it look like a Satanic plot authorized by the Queen of England herself.

Fox has done this with its Animation Domination High Definition Youtube channel:

The channel promotes Fox’s “Animation Domination” bloc of Sunday programming while carving out a new space for the usually-digitally-backwards company.

We can see the most effective use of this technique in music video production. It seems like if you’re a blonde pop singer like Lady Gaga or Ke$ha, it’s necessary to work some freaky occult imagery into your work, so that a massive community of conspiracy-minded deconstructionists will write blog posts and narrate Youtube videos about the mind-control powers of your videos. Needless to say, this drives traffic to the videos and improves search visibility.

Subliminal marketing may not actually work, and mind control rays are still prohibitively expensive, but it does get people who believe that mind control is a thing to spread your work.

Let’s look at the necessary components that you need to get the conspiracy community spinning:

• Pyramid imagery, particularly with that eyeball on the top. Hey, if it works for the Federal Reserve, it can work for you.
• Animal heads on human bodies have been freaking out people since the Middle Ages. Get beyond Baphomet: goat-men are classic, but remember that there are other cloven-hoofed animals that work. The hit indie game Hotline Miami uses almost every animal on the food chain in the product itself and the marketing.
• Numbers, Masonic imagery, upside-down crosses, stars of David: all of these time-tested religious symbols will alternately enrage and freak out millions of people from around the world.
• Tarot cards, crystals, and other New Age images tap into a substantial market. Hippie shops are all over the US. They stay in business. The profit margins on ‘magic’ rocks are amazing. However, you don’t have to become a scammer yourself to ride on the back of their cultural imagery.

Now, conspiracy fiction falls in and out of fashion. When the Da Vinci Code was a best-seller, it arguably held a cultural position similar to the Vampire and Zombie fiction-industrial-complexes hold on our culture today. This sort of strategy only works well when the trend is in your favor and there are enough fans of this sort of thinking.

Search interest in conspiracy terms is also rather geography-based, and it waxes and wanes over time.

For example, according to Google Trends, the US state with the highest interest in the Illuminati is Texas.

Take note! If you’re slingin’ products related to the Illuminated ones, you’re more likely to find a market for it in the South than in Montana, where they’re less likely to truck in your degenerate occult magicks.

Note also that some of the highest-volume Illuminati search terms are related to the pop stars Jay Z and Beyonce Knowles. Is the occult symbolism a cause, an effect, or totally unrelated to their success in the market?

I’ve no clue! But a lot of people do believe that it is, and as a marketer, any aspect of a creative work that sparks discussion and interest is worth knowing about. You can see how this can work to advertise products like this Skullcandy ad that I found by Google image searching for ‘roc sign,’ a hand gesture that Roc-A-Fella Records encourages its artists to use to emphasize its brand, which conspiracy theorists love to talk about.

Clever, huh? This technique isn’t appropriate for every campaign or company, but the method is broadly applicable to many markets.

This post will be short and simple.

1. Platforms that manage fraud and spam better than the competition will out-perform as agencies continue to ramp up budgets and transition from the experimental stage to ongoing purchases. Clients will continue to become more skeptical of ‘impressions’ numbers.
2. Google+ will continue to go nowhere, owing to shameless spam that makes the glory days of 2006 web marketing look tame, and its superfluity relative to FB, but AuthorRank is causing tectonic shifts in the SEO world. This continues the long-term trend of privileging press and the high-cost PR that pays into it over traditional search marketing. SEO will continue its backwards evolution into an industry indistinguishable from traditional PR. The internet is a great leveler… until some pigs become even more equal-er than others. Google wants pages written by authors who care about their reputation (as defined by Google) to rank above cleverly-disguised advertorials or advertising vehicles.
3. Campaign production values will continue to rise, as it becomes more expensive to compete for scarce audience attention. Online marketers have become accustomed to an environment in which there are tons of new entrants into the online world happening every year. In the West, the internet is becoming a mature space. It turns out that the brave new world is turning out to look an awful like the old world, but reconstituted on new technology.

For the past several years, central banks around the world have suppressed interest rates.

In the words of Roger Lowenstein on the actions of Federal Reserve Chairman Ben Bernanke in the Atlantic Magazine,

Bernanke’s unconventional programs have been implemented in two phases. During the financial crisis of 2007–09, he bailed out a handful of large banks and devised a series of innovative lending operations to disperse credit to banks, small businesses, and consumers (virtually all of these loans have been repaid at a profit to taxpayers). He also lowered short-term interest rates to nearly zero and made private banks run a gantlet of stress tests to ensure some minimal level of solvency going forward. Although fierce anger against the bailouts persists, there is little argument that this first stage was a success. However untidily the rescue was managed, the financial crisis is over.

In the second stage, Bernanke has sought to revive a weak economy by maintaining short-term interest rates at close to zero, and by purchasing, in vast quantities, long-term Treasury bonds and mortgage-backed securities. This second phase has been, if anything, more controversial than the first. Its success is much harder to measure (we have no way of knowing whether the economy’s improvement would have been less robust, and how much so, without Bernanke’s efforts). And it has exposed Bernanke to charges of meddling too deeply in the private sector, of disrupting the economy’s natural rhythms long past the point when such intervention is necessary. In particular, critics note that the Fed has stuffed the banking system with $1.5 trillion in excess reserves—money for which the banks have no present use, loan demand being modest, but which could one day spark an epidemic of inflation.

What are interest rates? What’s the purpose of an interest rate? Why is it unusual that rates be fixed at such a low level?

Interest rates are the price of money: it’s how much you need to pay in the future to get access to money in the present. The low interest rates in the banking system aren’t available to everyone. It’s only possible to borrow in major quantity if you’re an institution of some kind of otherwise control a lot of money. A typical individual with few assets and less than a few thousand dollars in savings can’t borrow very much in the current environment, but financial institutions can and do borrow trillions of dollars at such rates. Corporations with high credit ratings can also issue bonds at sub-1%.

Under ordinary market conditions, interest rates also indicate the desire of banks and other institutions to solicit savings. High interest rates mean, in theory, that few people are saving money, and that the bank needs to bid higher rates to induce savers to capitalize their institutions. Low interest rates would mean that the bank is overflowing with savings, and that less is needed, and that the bank would rather encourage people to borrow money so that the bank can profit from the interest.

There’s no such thing as an “ideal” interest rate. Like any other price, if it were unaltered, it would be a shifting equilibrium that helps people collaborate to reach their desired ends, like a price of any other kind.

Low rates should indicate a glut of savings. In our system, it’s only an indicator of a political initiative. In a banana republic, the dictator might give away bunches of bananas for pennies. In the US, we’re more sophisticated, and the financial system gives money away money for almost nothing to financial institutions and major corporations.

This is not what’s happening in the US. Rather than regurgitating thirdhand discussions of the data, I’ll go to the data on US savings rates in plaintext.

Let’s look at the monthly data from 2007 until the present:

DATE | SAVINGS RATE

2007-01-01   2.5
2007-02-01   2.6
2007-03-01   2.8
2007-04-01   2.5
2007-05-01   2.2
2007-06-01   2.1
2007-07-01   2.1
2007-08-01   2.0
2007-09-01   2.3
2007-10-01   2.5
2007-11-01   2.3
2007-12-01   2.6
2008-01-01   3.7
2008-02-01   4.4
2008-03-01   4.5
2008-04-01   3.9
2008-05-01   8.3
2008-06-01   6.1
2008-07-01   5.1
2008-08-01   4.5
2008-09-01   5.0
2008-10-01   5.7
2008-11-01   6.5
2008-12-01   6.5
2009-01-01   6.1
2009-02-01   5.2
2009-03-01   5.2
2009-04-01   5.6
2009-05-01   6.7
2009-06-01   5.0
2009-07-01   4.3
2009-08-01   3.1
2009-09-01   4.0
2009-10-01   3.5
2009-11-01   3.9
2009-12-01   4.0
2010-01-01   4.7
2010-02-01   4.6
2010-03-01   4.6
2010-04-01   5.3
2010-05-01   5.7
2010-06-01   5.8
2010-07-01   5.6
2010-08-01   5.4
2010-09-01   5.2
2010-10-01   4.9
2010-11-01   4.6
2010-12-01   4.9
2011-01-01   5.5
2011-02-01   5.2
2011-03-01   4.6
2011-04-01   4.5
2011-05-01   4.4
2011-06-01   4.7
2011-07-01   4.2
2011-08-01   4.0
2011-09-01   3.5
2011-10-01   3.6
2011-11-01   3.2
2011-12-01   3.4
2012-01-01   3.7
2012-02-01   3.5
2012-03-01   3.7
2012-04-01   3.5
2012-05-01   3.9
2012-06-01   4.1
2012-07-01   3.9
2012-08-01   3.6
2012-09-01   3.3
2012-10-01   3.4
2012-11-01   3.6

Savings jumped sharply in 2008 for whatever reason (my guess is that the market drove people to build their savings in response to uncertainty), but has held below 5% for most of this period aside from a brief time in 2010. In theory, this shows a successful correlation for Federal Reserve policy. The central bank has successfully subverted the traditional pricing role of the interest rate and induced people to behave as if there were a savings glut, when there actually is none.

Since 2009, the Federal Funds rate has gone from 0.16% to 0.14%. This rate has not gone above 10% since 1984. The Federal Funds rate is the rate at which depository institutions lend to one another overnight.

The results of this are that many prices in the market don’t reflect real conditions, and this is by design. Anything that you can finance directly through subsidized borrowing becomes more expensive (think mortgages, tuition for schools, governments, various sorts of investments), while the things that can’t be directly financed by subsidized borrowing either decrease in price or increase in price at a different rate.

Investors also consider interest rates (called ‘yields’) on bonds to be proxies for risk. When something yields little, the investor can assume that it carries little risk. In this environment, however, what’s actually going on is that the risk is concealed, but still present. You may be able to borrow $100,000 to finance your degree in Anthropology at 6.8%, which is well below historical prime rates, but since it’s subsidized, as a borrower, the manipulated price conceals the risk of that action. When the price for financing an Anthropology degree is identical to the price of financing a degree in Petroleum Engineering, students struggle to make good decisions about allocating their resources.

In this way, an entire society winds up mis-allocating resources, because accurate information about social equilibria — which is really just what a price is, the socially agreed-upon worth of something — becomes distorted. The typical signals that show flush times are instead politically-approved lies to get you to behave in ways that are against your interests.

Entrepreneurs who succeed are the ones who recognize real conditions and are able to utilize scarce factors of production to earn profits. Despite the low rates, real conditions are:

• Capital is scarce, not flush
• Savings rates are low, not overflowing
• Taking on debt is risky, not a sure-thing

Historically, the managed interest rate situation tends to end quickly rather than slowly, and without much warning to anyone but insiders. It means that borrowers and those reliant on borrowed funds for operations (directly or indirectly) can get blown up based on the arbitrary decisions of a third party of inscrutable bureaucrats in Washington.

According to the Securities Industry and Financial Markets Association (SIFMA), US investment-grade corporate bond issuance in 2012 rose to $1.026 trillion. This exceeds the previous high of $991.5 billion in 2007. High yield debt issuance was $328.7 billion, which more than double the pre-crisis high of $146.6 billion in 2006. You can follow the previous link to view the data yourself.

This is why, looking backward, I think that we saw in tech startups (my primary industry), a sudden revulsion for so-called consumer startups and a sudden hyping of enterprise companies.

Consumers aren’t getting the money for nothin’ and the chicks for free, but corporate entities are, which increases their ability to pay for services, buy companies, and drive some IPO activity. The primary customers of LinkedIn are other companies —  which can borrow money at < 1% —  while the primary customers of Zynga are ordinary individuals, many of whom have been deleveraging. That certainly isn’t the whole context, but it does demonstrate one of the core differences between companies and individuals as customer targets. One group is borrowing money at record numbers, and the other isn’t.

Also, sadly, this is driven by a drop in the labor force participation rate to levels last seen in the early 1980s. It’s become fashionable among my favorite economics bloggers to highlight this statistic rather than attempting to interpret official unemployment numbers, as the definitions for the latter can be more misleading.

Unfortunately for the companies borrowing tremendous amounts of money intending to sell products within the US to consumers, the trend is against them. The money borrowed today to finance corporate expansion can only be ultimately financed by profits in the future, which derive ultimately from consumers in the US and internationally.

The crashes of 2001 and 2007 essentially removed as many people from the labor force as we saw join it during the advent of feminism in the middle 20th century. Since the high in 2000, 3.7% fewer people are in the labor force in the US. It took about 14 years for the US to add that much to the labor force, from the publication of the Feminine Mystique in 1963 until 1977, and massive social change to accomplish it.

My take is that US companies speculate that international growth in consumer spending will make up for the contraction in the US. It may also just be that borrowers that can borrow with few direct consequences to themselves in the short term will tend to do so. But the problem with this is that low interest rates are a global phenomenon, enacted by every major central bank in the world. As interest rates are a proxy for savings rates, it makes it appear as if the stock of global savings is much higher than it’s actually likely to be.

Many people take interest rates at face value, like they take any other price at face value. If the grocery store started selling bacon at $0.50 per pound, funded by some jerks in another country that you don’t know or like, if you were like me, you’d increase your consumption of salted pig meat or use the savings to buy more of other things. Most people don’t waste their time on trying to understand what factors go into prices: it’s impossible for any one person to know about all factors of production. The famous essay “I, Pencil” explains this well.

My forecast is to not make forecasts, even when people beg me to make them (this was my New Year’s resolution, and it’s already been tested a few times). Prices tend to converge to a real representation of supply and demand, although the path is unknowable.

I don’t understand what causes companies that are otherwise well-staffed by competent people to ship products that they know are buggy. The usual cause (particularly in software) is an over-adherence to a fixed ship date without having the capability to estimate the work.

Software is inherently unpredictable, but it becomes even more unpredictable when producing something that’s genuinely new. Estimates can become more accurate when you’re churning out a product that’s made up of standard components. It’s likely that Activision can produce very accurate estimates for new entries to the Call of Duty series because it’s built on technology that it first deployed in 2005, and the formula has hardly changed since then. They can make their regular ship dates and produce reasonably bug-free products because they rarely take risks with major innovation, and their customers are pleased with that arrangement.

Buggy products tend to ship when producers act as if innovation has no risk. Every innovation is unpredictable. Even if it works as intended, it might suck, and nobody might want it. It’s more likely that it will not work as intended and will suck.

What happens when a buggy product ships with a competent marketing campaign supporting it is that the customers who feel they were duped take to the internet to talk about all the bugs and glitches that they encountered.

The early adopters that your product relies upon to actually make your marketing effective (because they will either validate or contradict your marketing claims) enjoy their social position based on how reliable they are as filters for marketing. The legend of the consumer that sits on the couch to suck down marketing messages uncritically was never really true, but it’s much tougher to maintain belief in it now, when any person can comment on your $3 million trailer about how much your movie sucks.

Features in a product can be subjectively evaluated. Customers and critics can debate about whether or not they value them. Bugs are objectively problems in the product, and anyone who points out that a product is faulty can’t be debated with.

I encourage people to think about bugs in terms of how fixing them makes marketing more efficient. Not all customer bases have the same tolerance for bugs in products.

Hobos don’t care if their cheap vodka is impure if it gets them wasted in a predictable and inexpensive fashion. A Mercedes customer will switch to BMW at the first opportunity if their car turns out to be a lemon. The hobo has a high bug tolerance. The Mercedes owner pays for perfection.

Mercedes spends thousands of dollars per customer acquisition, and even more on retaining a lifelong customer. Delivering a lemon to a customer could wipe out the lifetime value of that customer and make all the marketing dollars spent to gain his loyalty completely useless. At the Illuminati sacrifice ritual or wherever fellow Mercedes enthusiasts gather, that wronged customer will probably whine about his messed-up car to other people in his demographic, causing more damage to the company’s reputation.

Delaying a product for quality assurance is expensive, can mess up distribution, harm company morale, give competitors opportunities to release on a faster cycle, and create different challenges for marketing. Those short term costs need to be weighed against the major damage to the reputation of the company releasing buggy products. You can imagine reputation as a number by which the profit on your marketing spending gets multiplied.

If you have a bad reputation, it’s less than one. If you have a great reputation, it’s more than one. Every bug in a product will certainly subtract some value from that number. Bugs are ammunition for your product’s haters that they can use to perforate your marketing claims.

If you ship enough bad products, the number goes negative, and you’ve no company anymore.

There are two ways that companies have solved this: managing expectations and quality assurance.

Managing expectations is easy, but requires humility. You slap a “Beta” or “Alpha” label on the product. When it’s something that’s nonessential like software, you can get away with it, but this even works for cancer drugs. Study participants for cancer treatments are like high-stakes beta testers. They sign away their right to sue if teeth start growing out of their ear canals. Even buggy products labeled as “beta” can succeed. That process can enable the product to become less buggy than it would be otherwise by exposing it to customers sooner.

Industry observers tend to remember the success stories of this strategy better than they notice the piles of failures that never make it out of beta. The strategy only works if early adopters can see glimmers of gold in the mud of your beta. Most of them are mounds of filth with no sparkly bits, and never find a group of customers to defend its worth.

Extreme quality assurance is expensive, risky, and requires a perfectionist orientation in the company. The New York Times is an example of a brand built on quality assurance. So is Apple and the aforementioned Mercedes. The product needs to be profitable enough to support the cost, and maintaining the reputation of the company is the highest priority for everyone in it. Ernest Hemingway made his reputation on perfectionism, even if producing one published page required dozens of drafts and quarts of liquor.

It’s patronizing to say “improve the quality of your products and they’ll be more profitable,” but it seems to me that ordinary people tend to mistake the trade-off between adding new features and risk. Shipping many buggy features lands poorly in the market, particularly as the general chatting public is less easily manipulable than the press.

One of the reasons why people form communities is to filter and comprehend the bombardment of information that defines modern life. Unlike in previous eras, when information was a scarce good, any otherwise poverty-stricken person anywhere in the world can access a massive supply of the stuff on demand with a cheap pocket computer.

This increases the relative value of the information filtering function of communities. Given a massive amount of information to contend with, people form bands dedicated to evaluating information for truth value and how close it adheres to their aesthetic values.

People have always organized like this. The professional media do this as part of their jobs. The internet makes it a lot easier to find like-minded people that might be capable of doing a better job at this than the professionals, at least in aggregate.

20,000 subscribers to an online community are probably better at doling out dating advice, in aggregate, than the small group of people who occupy the masthead of Cosmopolitan. Any single professional is better at their role at a magazine than any single member of an online dating advice community.

When people consume packaged, professional media like newspapers, professional blogs, magazines, television shows, and books, they’re in a credulous, trusting mood. When they’re interacting with an online community through something like Facebook, Twitter, reddit, or something else, they’re in a skeptical mood. They wouldn’t waste their time on the internet if they didn’t think that it was a good way to acquire information filtered to their particular tastes.

Most marketers re-use the same campaigns that they use to build hype to a credulous audience to sell to a skeptical audience who have organized themselves, socially, in a way to debunk marketing messages based on hype.

Selling to skeptical people it different from selling to the credulous. The rewards can make up for the cost — skeptical customers tend to be loyal ones, because they devote so much effort to honing their good taste. The behavior they communicate by being skeptical in the first place demonstrates how much value they place on their purchasing choices. Since evaluating products is expensive for them, rather than whim-based, they’re less likely to switch to a competing product.  The 2003 New York Times article by Rob Walker about the marketing of Pabst Blue Ribbon is a useful example of how to accomplish this.

Overcoming the skeptic’s resistance is a process of

• Establishing why you’re trustworthy
• Treating the prospect like an intelligent person, rather than an easily-awed dupe
• Adopting a similar cultural pose to the target market (this is challenging to fake)
• Following through, sifting out relevant feedback, and applying it to the product

Skeptics have more cultural influence now than they used to have. This is because it’s much easier for people to coordinate and to communicate than in the past. Word-of-mouth used to need to travel from mouths to ears. Not all markets are dominated by skeptics, but enough of them are that it’s worth the effort to consider how to sell to them rather than giving up entirely.

Sell in plain English, because buzzwords expire.

I’ve thought often about buzzwords, because hearing them makes me feel some combination of fear, anger, and anxiety. If I owned a gun, I’d reach for it whenever I heard a buzzword.

This reaction probably comes from my background as someone with literary pretensions. All the great American writers (and at least one English one named Orwell) from Vonnegut to Twain to Hemingway all implore writers to restrict their vocabulary to what readers actually use. This is good advice, because verbally clever people love to bamboozle their less-adept counterparts with odd words. The same vocabulary used to make American literature makes for superior American sales.

Like larceny, buzzwords work well for a time. Buzzwords begin life as a way from business people in different companies and investors to communicate about a convoluted process. Some professional genius invents a special term to describe some new line of business. The trade publications pick it up. And then, the buzzword leaks into the marketing of dozens of enterprises. Some savvy customers start asking for the buzzword, even if they don’t know what it means, precisely.

Inevitably, people in the industry start fighting over the true meaning of the buzzword, because the real meaning was never clear in the beginning. Neologisms can fail for the same reasons as products and companies do.

Using shoddy words to sell your product attracts the wrong kind of customer. It attracts the kind of person who wants to buy something just because it sounds like the right thing for her, that it’s the cool thing to do, rather than the kind of customer that understands why and how the product will benefit her. The former kind is a fickle customer that will leave for the next bombastic pitch that comes their way.

Selling with buzzwords may get you that customer hunting for the new acronym of the week, but it’s unlikely to earn you a lifetime buyer.

The internet also privileges imperishable copy. If you use the real language of everyday people, your copy will sell just as well in 10 years as it does today.

“Share this with your followers!”

“Share this link with three of your friends to get into the beta!”

“Invite three friends for pumpkin seeds!”

The social share button is the ‘brother, can you spare a dime?’ of online business.

Trying to Get Something for Nothing

When asking customers to push a message to their lists of friends, remember that credibility is an exhaustible resource. Different customers want to be perceived in different ways by their friends. If they expect that pushing your message will enhance their social standing, they’ll do it. If they think it might damage their social standing, then they won’t share.

If your prospects are uncertain about the value of your offering, asking them to ‘share’ is asking them to take a risk on you. And if they don’t trust your company, then they’re not going to take that risk. Begging for a “like” without offering value is a losing strategy. Experiencing the pain of this failure is what turns businesses to spam techniques —  they try to get started with begging. The time-honored method is to begin by offering value first, and then giving prospects the opportunity to reciprocate.

It may cost $0 to post something on Facebook, but it still has potential risk and cost to the credibility of the user. If that customer (or potential customer) attributes little value to their credibility, then their potential value in spreading the message of your business is close to $0.

This is how much it costs to buy a robotic Twitter follower with no credibility: $0.018, according to the internet security specialists Barracuda Labs. One tweet from one of those two-penny bots is barely valuable enough to calculate. It’s tough to discriminate between bots, high-value customers, low-value customers, and high-value customers who aren’t good at looking cool on the internet.

Your uncle Barry may be a potentially valuable customer to some business — perhaps he makes $300,000 per year and loves purchasing expensive boating equipment on an annual basis. The catch is that he may have less-than-zero credibility thanks to his penchant for forwarding chain letter e-mails and his repeated posting about the Mayan Apocalypse on Facebook. While there are countless tools out there for measuring “influence” and “reach” on social media, there aren’t many that connect that with real purchasing behavior.

The idea that mass-promoting through Facebook and Twitter is a low risk / high reward strategy mistaken.

It’s usually a high-risk, potentially low-reward or loss-making strategy. It’s certainly not the only strategy that you want to pursue to spread the good word about your product.

Not every pair of eyeballs is worth the same as another pair of eyeballs. It’s a mistake to treat customers like commodities if you want to run anything more than a marginal commodity business.

The funny thing about this video is it’s an accurate portrayal of the muddy, often unethical, and bot-ridden state of online marketing today. Major companies buy lists of robots to ‘advertise’ to, and have only limited methods for tracking conversions. Despite a theoretical capacity to avoid sending the same ad messages to people who are already customers as those who aren’t, plenty of companies make ad purchases based on expressed preferences rather than purchasing behavior

It’s a fundamental error to assume that all advertising messages are good for your product. The adage that “all publicity is good publicity” is wrong. When people complain about advertisements that “annoy” or “offend” them, it’s safe to assume that they’re telling the truth. Those follower-and-like counts can deceive a marketer into believing that just because X thousand people are reading something, it’ll impact sales.

David Ogilvy wrote “The wrong advertising can actually reduce the sales of a product” in Ogilvy on Advertising. Intuitively, we know this from our experience with annoying or offensive ads. But when a professional gets paid to produce an ad or to formulate a “social media strategy,” bum incentives combined with ordinary incompetence often result in an endless trickle of treacle squirting from every free “social” account that they can get their hands on.

The endless supply of “social media channels” — publishing technology that’s so cheap that it’s almost free — has caused an overproduction of vapid and counterproductive marketing messages that pollute the attention of customers everywhere. In any kind of business, the only sustainable goal is to improve the lives of your customers.

But you’re going to have struggle to pay your bills and to mollify nervous investors if you continue to worship at the altar of “continuous connection” with your customers regardless of whether or not it improves their lives. Just because someone likes your company’s page or follows your company’s Twitter account or follows your company’s Pinterest board isn’t necessarily an indication of a customer relationship. All it says is that they clicked a button on one of your pages. “Like” doesn’t mean “like.” It’s more of a vague expression of interest that’s often quickly forgotten.

I’m open to be sold to when a company has something to sell. To be pedantic, selling is convincing a prospect that they’ll be better off after they buy your product.

This is an example of a “social” ad, which is no different in structure from an infomercial, which worked on me:

This ad is up-front with the benefits of the product, explains the ethos of the company, and wraps it in a humorous package. It also only cost $4,500 to produce.

If you’re trying to persuade someone, you need to answer the implicit question of “What’s in it for me?” Online, I see few companies willing or even capable of articulating a value proposition  Asking for a “like” is so often akin to begging for permission to annoy the customer until they decide to hide your page.

There’s something good to be said about a company that sells, and then goes away and stands ready to provide service upon request. This isn’t a radical proposal: it’s what waiters in nice restaurants do. If I’m at a restaurant, I don’t want to be harassed every 45 seconds to “try the Bloomin’ Onion™.”

Sell me the onion once and then go away. Explain to me why this is the bloomingest onion in the world. If I say “no, not interested,” go away graciously.

Here’s what I want you to learn from this post:

• Annoying, offensive, and irrelevant marketing messages cause people to associate uncomfortable feelings with your company. This harms sales.
• Just because you can post something to your “followers,” doesn’t mean that you should.
• “Engagement” is only worthwhile if it involves you selling your customers something that improves their lives.
• When you’re publishing media for your company, sell. You’re not trying to make friends with the customer, except in the context of being a friendly salesperson. You’re selling them something that will make their lives better.
• Be suspicious of any numbers that can be faked trivially. Sales are good. Follower counts are bad. Like counts are bad. E-mail sign-up counts are questionable until they’ve been validated by sales.

How do you make a million dollars in less than a day?

There’s only one reliable method that I’m aware of.

When Obsidian Entertainment launched their Kickstarter yesterday, I committed $20 without even reading the copy or playing the video.

They convinced me to give them money today roughly 12 years ago, when I was 14 years old. I faked a stomach virus so that I could stay home sick to get through the Underdark in Baldur’s Gate 2. The development team that made that game has long since dissolved. The company that published it has gone out of business (I wrote about why, recently, for some reason). I gave $20 because I remember navigating Minsc through the beholder maze with Balduran’s trusty shield to protect him from their deadly eye-beams.

I gave $20 because I still remember Ravel Puzzlewell asking “What can change the nature of a man?”

These are good tests of whether or not a product is any good, regardless of whether it’s for consumers, small businesses, or humpback whales. Is anyone going to remember this product in 10 years? 

At least 25,000 fans had similar experiences to mine. The veteran developers who worked on some of the most beloved software of the 1990s and 2000s capitalized on their long careers and good reputations to collect over $1m in pre-orders with little but some some well-crafted pitch materials.

You never know when the good work that you’ve done in the past will pay off. Some Swedish Java programmer who liked your game in 1998 might hit it big and give you $10,000 on the day that you need it.

You make a million dollars in 24 hours if you start working towards it and keep working towards it as early as possible. Skipping that decade (or longer) is almost never an option.

All the “fast viral growth hacking” in the world seems pathetic next to the tested and reliable method of satisfying many customers over as long a period of time as possible, listening to them, improving your products based on their feedback, and retaining focus on the customer.

If it were more complicated than that, human civilization would have already devolved into rival motor cycle gangs clobbering one another with tire irons.

Ten happy customers is worth infinitely more than 100,000 robot retweets. A hundred happy customers are worth more than 10,000 spam back-links. A thousand happy customers are worth more than 15,000 identical Facebook profiles operated by small armies of offshore laborers all with Myspace-angle profile pictures of bleached blonde ladies sharing your precious ‘content’ onto 20,000,000 news feeds. I’d even take 50 happy customers over 200 hyperactive fake five-star review copywriters.

Twenty thousand happy customers are good for at least a million dollars in less than a day.

One set of methods is great for making charts with erection-shaped curves.

The other is a reliable way to get customers to give you dollars, which you can use to pay for rent, salaries, and other goods and services.

Dollars or faked chart-boners? I’ll go after the money every time, thanks, and you should too.

I wrote my 1,000th answer on Quora today.

When I started using Quora in 2010, I was busy trying to quit being a freelance copywriter.

The turning point for me was reading a number of articles written by other freelancers about the poverty that they experienced. I saw myself in the reminiscences of empty refrigerators and un-laundered clothing shared by others. That proved to me that it wasn’t just me, and that my protestations that I could just be tougher, smarter, and better than my competitors in a shrinking industry were just self-puffery.

This was hard for me to do, because I had spent the previous decade telling myself that I was going to be a professional writer, no matter what, and that I would power through any obstacle to achieve that dream. The problem turned out to be that success at that goal was worse than failure. I would’ve been better off aspiring to become a mediocre accountant.

In Quora, I saw a better opportunity to write for an audience of reputable business people than blogging offered. When you know little about business, you’re easy prey for the scammers and hucksters that maraud around the lower social strata, hunting for dupes.

Instead of chasing after readers that might or might not actually help me climb the social ladder (which was my primary interest), Quora gave me a boost when I sorely wanted it and had already attempted dozens of other methods for personal advancement.

It would be proper to look down on my efforts as a dumb striver. I don’t care. I was sick of wearing worn-out sneakers for 12 months at a time. I was envious and bitter at seeing people who were no better or worse than me flopping into remunerative careers out of college. I wanted to do something about it.

Writing a lot on Quora did wind up working for me better than I anticipated. In roughly five months of usage, I accumulated multiple job leads, some new gigs, and ultimately a job offer at a startup in Silicon Valley that I took. That was more efficient than what I’d tried before.

Another goal that I kept in the back of my head was that I wanted to introduce more business people to Austrian Economics and to reasoning from first principles. I was bored of hanging out with people who already shared my opinions. It wasn’t sporting. I’ve now met mind-boggling numbers of people that say that they’ve appreciated my writing on those issues since I started.

I worked towards that because I remembered my experience, pre-2007, of learning about the Austrian perspective, and enjoying a bit of a window into the future to the financial crisis. I figured that I could reap new credibility much later, when interest rates rise again, for my explanations of economic events, and could spread sound reasoning where it was needed besides.

I’m much better off now than I was when I started using the service. If I’d never started using it, or if it had never existed, I would’ve likely stayed at roughly the same level with little improvement for years longer than I would’ve otherwise. I’ve a stronger base of business knowledge than before.

On balance, the time and effort that I’ve poured into the service has paid off. It’s helped me to build the beginnings of a reputation that I can build a life around, which I appreciate.

It’s also earned me some money. I had a hard time justifying to myself the time that I spent writing on Quora when I could be writing for money or pitching clients, but it turns out that I’ve indirectly made a good chunk of money per answer, better than the rates earned by a lot of magazine writers these days.