Another BlitzLocal colleague and I were discussing “leadership” and what that truly meant.  We came up with this analogy, which I hope you’ll enjoy.

Imagine you move rocks for a living.  The more rocks you move, the more you’re paid.  You don’t move rocks, you don’t get paid.  Thus, you understand the direct linkage between putting in time and compensation.  This is the hourly wage model– some rock movers get paid more than others, whether flipping burgers, working in a big corporation, or drilling teeth. The more teeth you can drill, the more you’re paid.  Are you a corporate wage slave or someone who is paid piecemeal?  This was me for twenty years of my life– a prostitute selling my time for money. Whether I billed $5 per hour or $250– it was the same thing. One day in the proverbial quarry, you decide that moving more rocks to get paid more was not the right answer.  At best, you might move 20% more rocks than the other guy in a particular day, but it wasn’t sustainable.  So you leave the quarry for 7 days, much to the surprise of your fellow laborers. In that time you move no rocks and make no income.

THE SHIFT

But when you come back, you are driving a bulldozer.  Now, in one day you are able to move 100 times what a single laborer can do. But to get that bulldozer, you had to temporarily earn nothing– plus spend money to buy the vehicle and spend time learning how to drive the thing.  Your fellow laborers, noses down, continue to keep moving rocks– they don’t look up to see you in the bulldozer. They have heard about bulldozers in the magazines, but never thought it was something possible for them.

You hang out with the other guys driving bulldozers.  You have newfound wealth, which is fleeting, since the crowd you run with also enjoys the same standard of living.  You’re right back in the middle of your peers.  It feels great to be 100 times more productive than you were before, but you’re not quite fulfilled.

ANOTHER SHIFT

So you leave the quarry again and disappear for 7 days.  In that time you move no rocks and make no income.  And when you return, you are back with 100 bulldozers and 100 other eager new bulldozer operators. You’ve opened a bulldozer training school!  Flocks of manual laborers who used to move rocks now come to be trained by you.  And you make a commission on the rocks they move, since these laborers didn’t have enough money to buy their own bulldozers.  These laborers are now moving 100 times what they did before, but given the costs of training, equipment, and your profit, they only make 10 times what they did before.  Still, they are happy.

And you are temporarily happy.  With 100 bulldozer operators moving 100 times as many rocks as a single man can do, you’re at 10,000 times your earlier productivity.  Your lifestyle has changed, too.  You have have a Granite Card by American Express and have a new mansion in Boulder. People admire you–you’re a ROCK star. They think that the secret to your success is getting stoned.

But it’s not enough– something inside you is not quite satisfied.  You can only train so many new bulldozer operators per day.  You’re still moving rocks in a sense, just mass quantities. Growth in your bulldozer school is directly related to the amount of time you’ve put in.  So one day you close the bulldozer school.  The press thinks you’ve gone mad– that you’ve lost your marble.

SCALE UP AGAIN

You disappear for 7 days.  And when you return, you’re holding a brochure in your hand– “How to Open Your Own Bulldozer Training School”.  You’re created a franchise model, where you are training up other school owners. You have first hand experience in training new bulldozer operators, so new school owners can rely on your experience.  You now have sold 100 franchises, each one with a happy owner training 100 bulldozer operators, who in turn do the work of 100 laborers.  That’s 1 million times leverage.

THE LESSON

You would not have been able to pull this off unless you had personal experience moving rocks, driving bulldozers, training bulldozer operators, and running a franchised business.  You were able to take your knowledge and multiply it.   If you didn’t intimately understand each aspect of the business, scaling up would have just multiplied losses.

Now examine your life and what you do.  Are you moving rocks or are you multiplying? Writing software is a multiplication process.  You can write one copy and sell it an infinite number of times.  You could hand-build a single PPC campaign for a client or perhaps write a campaign management tool that can do it over and over in an automated fashion.  But just like the rock moving analogy, if you aren’t a practitioner with hands-on experience in managing campaigns, your automation won’t be effective.  There are lots of guys selling software that builds websites, manages PPC campaigns, creates SEO reports, sends out emails, and any variety of tasks.

If you want to create massive value, consider the rocks that you are moving. Can you write software or processes that can make life easier for others– or perhaps do some task faster, more effectively, or at lower cost?  Everyone has something they know exceedingly well.  What is that skill for you?  You don’t have to be able to write code.  Software is nothing more than rules for machines, just like processes are rules for humans.

McDonalds is a software company that just happens to make burgers.  People go to McDonalds not because it has the most delicious burgers, but for the consistency of the food and the experience. You can take pimply-faced teens all over the world, minds distracted with their latest relationship dramas, speaking different languages, skilled or not– and still turn out that same value meal each time. That’s process for you.

NOW IT’S YOUR TURN

BlitzLocal is about empowering individuals to become entrepreneurs– we provide the tools and process to allow folks who know little about internet marketing, but are eager and willing to learn, to perform like experts. Our analysts are trained to help small business owners grow their practices.  We’re about the little guy helping the little guy.  Do you want to be a part of our team?  Contact me to find out more.

Pubmatic released a report covering the massive drop– Q408 average CPMs are at 26 cents.  Before folks claim economic peril, let’s consider a few other factors.  The mix of inventory for ad network has shifted dramatically to social, which has historically terrible CPMs.  From a weighted average perspective, it’s hard to say exactly the impact, but we know that 4 of the top 10 sites out there are now social and that social traffic recently passed adult as the largest category.  And the reason that social network have bad traffic is not necessarily because of a young demographic.  The more pages that users consume on a site, the lower the frequency they click on ads.   If heavy users are consuming 60 to 100 pages per day on a social network, as opposed to 6 to 10 pages on other sites, you cannot expect ad clicks to increase in linear proportion to pageviews.

What I’d like to see is gross earnings by site quarter over quarter.   Internet advertising is such that we have a growing audience of users consuming more pages per session– thus CTR will continue to slide.  And if revenue per click is constant, you can’t help but see eCPM (what publishers are earning per thousand impression) and CPMs slide.  My hunch is that gross earnings per site are flat, as opposed to down 50%.  Falling CPMs is both normal and good.

Yodle and Ambassador, both out of NYC, were featured in a Kelsey Group press release.  Yodle was founded by a friend of a friend of mine and just raised $10MM.  And ReachLocal’s $300MM valuation is insane.  Funny that these guys, Orange Soda, Webvisible, LocalLaunch, Marchex, and other folks are getting into the local advertising game, but that the engines and yellow pages themselves aren’t making significant innovations here.  It’s still early and it may be years before any one of these companies, BlitzLocal included, has a full suite of offerings that truly helps local companies get more leads– not just on the web, but via any channel.

The risk of trying to grow quickly in a new market is hiring over-aggressive sales people, hiring too quickly, spending your newfound venture capital money and putting growth ahead of true success.  I’ve seen big players put marketshare ahead of both profitability as well as client success.  The result of that, as discussed by the major players at the Kelsey Conferences, is high customer churn.  You can automate creation of websites and pay-per-click marketing campaigns, but it will take a lot more than that to truly deliver results to local service businesses that they can appreciate and understand.

It will be interesting to see who the leaders are 6 months from now, or even 3 years from now.  The tightening economy will only accelerate losses that “fast growth” companies are experiencing, plus reveal flaws in the business model.  I anticipate a bubble in local search within the next year, though it won’t be on the scale of the dot-com bubble.  Business fundamentals, my friends– you have to make money at some point.  And you have to do it while still providing superior results to your small biz clients and compensating your people.  Doing that is ultra hard– client acquisition is easy.

Lee Scott in his annual address to the National Retail Federation, noted that in the latest focus group of young shoppers, “Every  one of them had given something up, and they were talking about how good they felt about doing that.” Thus, he doesn’t see a rebound in sales any time soon.  Look at your life.  Are there things that you can give up?  Maybe it’s time to do a little housekeeping on your recurring expenses– see what you really need.  I’m not saying that you should be ascetic or start being frugal, even.  But maybe simplifying your life can be better.

I first heard of Yodle about 4 years ago, back when it was called NatPal, by Nathaniel Stevens out of UPenn, a friend of Brad Twohig, who is our joint friend.  Since then, I’ve seen the company grow from a few dozen clients to a reported 5,000, bring in a CEO (Court Cunningham), and a whole executive team.  Of anyone in the marketplace, I see these guys as the leaders so far, even though Webvisible and ReachLocal are far larger in terms of customer base, revenue, and staff.

The local advertising game is far from won—- the mainstream has yet to see a dominant player emerge, much less be able to recall any name brands.  As much as we’d like to believe the yellow pages will die an instant death, change occurs slowly.  And I see the most efficient player being able to win.  Yodle.com sells less on force of sales and more on the performance basis of calls driven.  Call tracking is powerful, as clients can see measurable impact.  But the game is early.  Nobody yet has figured out a true multi-channel marketing play that delivers pure ROI for local, even though the search engines, yellow pages, newspapers, radio stations, agencies, and other guys are trying to build their own and partner with others.  Expect to see some consolidation as a result of the economic downturn.

The eventual winners (and I believe there is room for many large players) will be the ones that deliver great value to the clients (transparent results and a large share of the client dollar actually going to marketing spend), plus take great care of their sales, operations, and engineering teams.  Social media is increasingly important, for example, Facebook advertising for local. Trouble now is that building such a team realistically costs $5-10MM, depending on how it’s done.  It takes, by my estimate, a team of two dozen folks for two years to build this out.  The fully loaded cost of a person is about $125k in a major metro.  Add in some marketing and sales expense and you can see how the numbers shake out.

Kudos to Yodle.com for being able to raise another round in a difficult environment.

CNN.com reported a story where Larry Flynt and some other porn executives are asking Congress for a bailout.  I suppose the folks making free porn are losing their shirts, literally?  If the adult industry, one of the largest and most lucrative segments of internet traffic, is asking for a handout, then things must really be bad.  Who will be next in line for free federal money?  We already know tobacco gets massive subsidies– $530 million from 1995 to 2006, for example.

Here’s the response from an unhappy customer of ours on SocialMedia.com, when I ran the ad network there a year ago.  Reminds me of the United Airlines customer who was so mad about United not responding to his issues– repeatedly– that he created untied.com.  United’s management stance was that they should not respond to such folks.  Aside from the PR issues involved from corporate speak on the boards or not responding, it’s good business practice to show customers that you are taking action to give them great performance.

Moral of the story, respond to these folks before they get so mad, they begin undermining your brand.  Or better yet– don’t even allow problems to get to this point.  It doesn’t matter whether you are an affiliate ad network, a seller of horse nutritional supplements, a Colorado cosmetic surgeon, or seller of discount caskets.  Take care of your customers!

At merely mentioning “twitter skins” in an earlier blog post, this blog ranks #2 and #3 in Google for searches on “twitter skins”.  And that natural search result drove 8 visitors yesterday, of which several decided to take me up on my offer of a free skin.  This is a great example of the positive feedback loop that can occur when you blog about something, see that it got some traction, and then decide to blog more about it because there is interest.  In fact, I am amazed that there are so many folks on Twitter– over a million now.  And twitter.com has an Alexa rank of 624 now– it’s the 624th most popular site on the web (yes, I know these numbers are not fully accurate for various reasons, but the point stands).  There is a full on cottage industry– twellow.com for yellow pages, be-a-magpie.com for PPC (you can have ads for one in every N tweets)– plus a host of monitoring services.  Seems that many of us are essentially unpaid volunteers to grow twitter’s user base and market valuation.

But back to free twitter skins– hit me up if you want one and we’ll turn them around in the order requested.  Make sure to tell me what you want for your background and include a .jpg of your headshot, assuming you want that.

Do you remember the craze with “pimp your profile” on MySpace, where teenagers (and even adults) would spend hours customizing their profile pages, however uglier they became?  I can see a cottage industry for doing the same on every social network– might as well have twitter backgrounds, twitter glitter (do you like that name?), and other bling-bling.  I can see a ton of folks buying domain names that have twitter plus something in them.

And this is coming from a guy who felt twitter was a waste of time for people who didn’t already have enough of their time wasted through instant messenger, Facebook, their blog, and a whole host of social networks.  I feel like I’m so busy keeping up with work, that I can’t get any work done.  Imagine that.

Have you seen YSlow? It is a Firefox plugin that extends Firebug’s functionality to show some interesting information, such as page load times, and the heaviest parts of the site. You can use the information gathered to increase performance on your sites. Here’s an 8 minute video presentation on YSlow by Jeremy Zawodny, who was at Yahoo! when I was there.  BlitzLocal.com, which admittedly a work-in-progress, scored only a 64.  Humbling, as are the scores of many of the sites that we know and manage.  If you already have Firebug and like it, then you’ll love Yslow.

I said “suck” above to get your attention. There are many ways to suck– your product or service sucks, your design sucks, your customer service sucks, or whatever.  But you should never suck because your site loads slow or has coding issues.

Update: Perhaps the most common culprit we see that is an easy fix is to not compress images.  That will often balloon the page to 1 MB.

For those who haven’t seen this before, a hilarious view of what Facebook might look like in 20 years.  But the real question is– what will us folks who are in our 20′s and 30′s be doing when we’re 50 or 60?  Will we be using social networks to find discount caskets?  We’ll still need services as senior citizens, so how will we deal with that in an ultra-connected online world?  Blackberrys and Iphones that are integrated with hearing aids?  Social security payments that are made directly to our PayPal accounts?  What are your thoughts?