Nick O’Neill of AllFacebook.com wrote today about a service that sells fans for 10 cents. On the surface, sounds great, right?  You could have 10,000 fans for only $1,000.

But wait a minute.  What share of those fans are based in the US?  Probably very little, since the unsold inventory is for Turkey, Chile, India, and countries that don’t monetize.  If you want to see the top countries for Facebook, you’ll notice that Turkey is #3.  So just what “are” you going to do with those Turkish fans of your page? 

You might also consider the general quality of such fans. Are these incentivized fans, meaning that they’re fanning your page because they’re earning virtual currency in some game, and not really interested in your product or service?  Or maybe these are just random people who, for some reason, have nothing better to do than click on pages– don’t laugh, I ran surveys on Facebook that shown this to be true, as some people are bored and/or hate their jobs.  Whatever the case, are these truly fans of your page or just random people (or even robots) who clicked a button?

If you buy fans by doing CPM ads on the Facebook homepage, we’re told it works out to $5 to $10 per fan– thus, 50 to 100 times higher.  But is that necessarily more expensive?  With the Facebook homepage, you’re advertising among trusted brands– and you’re able to hypertarget in ways well beyond what is available even on self-serve.  For example, you can target all small business owners in the US who are male and over 30 years old.

If you’re paying at the rate card of $20 CPM and your ads work out to $5 per fan, that means you’re getting 4 fans per 1,000 impressions.  That’s decent, but by tweaking your ads as well as your targeting, you can perhaps get a 10x improvement on your performance.  So now you’re down to between 50 cents and a dollar a fan– and it’s a real fan.  Plus, you can show video and have interaction, such as polls– not possible in other ads on Facebook.

Considering that Google PPC is about $1 a click, paying the same price for a fan on Facebook as for a click on Google may make a lot of sense depending on the category you’re in.  For point of reference, when we sold installs on Facebook 2 year ago, we sold them for between 25 cents and a dollar.  Really, it was whatever we could get folks to pay.  And initially, we just sent all that traffic we couldn’t monetize with affiliate ads– so no US installs.  RockYou told us that they’re still selling installs (which are not the same, but similar to fans), so I’d love to hear experiences from other advertisers on what’s working for them.

I get pitched a ton of ideas and most of them are pretty good. No doubt, it’s a GREAT idea! Odds are that it might not be truly unique, as is typical in web entrepreneurship. However, the winner in the space is the first to properly execute. No experience founding a company before, don’t have a lot of money, need engineering expertise? Have no fear. My advice for you is to go out and buy “Founders at Work”– which has interviews with a dozen web entrepreneurs who went on to found Yahoo!, PayPal, and other ventures. Find out what it’s really like in taking something from concept to a multi-billion dollar reality– it’s probably not what you think.

Already have in mind an agency you want to pay to develop your concept? Don’t do it. That agency likely has solid experts in PHP, Facebook development , WordPress, or whatever,— but if you look at the stats, rarely does a tech startup succeed by having agency development resources. Unless you have a TON of cash and don’t need inspired engineering, the odds are not in your favor going this route. The catch-22 of agency work is that if these folks were so great, why aren’t they building their own ideas? Analogously, if you’re such a great stockbroker, then why aren’t you building your own portfolio? Great tech startups need a technical co-founder. If you’re paying a contractor or worse– an agency– you’re not getting someone who is sleeping, dreaming, and eating your idea, 24×7.

Ideas are a dime a dozen– execution is everything. And rarely can one person summon the energy needed to pull it off, even if you have all the skills needed. You might also read “Hackers and Painters” which goes into detail on how great builders, innovators, and engineers in the web space are the same thing.

So first order of business, before you’re looking at hiring other people or spending money on marketing is to find others who will join you in the cause. Let those other guys spent a year chasing those VC dollars, while you focus on execution, are absolutely frugal with every dollar, and have a lean, hungry team looking for results.

Earlier this year, I had the good fortune to meet Dharmesh Shah, founder of HubSpot. His tips, while seemingly anti-VC, are right on target. Fail quickly by releasing early– then you can suck less faster. Don’t release your product for free– charge for it. Start demoing on real customer, not your friends who will say what you want to hear. Focus on results, not on powerpoint presentations. Don’t go pitch everyone you know– you’ll end up spinning your wheels. And ignore those naysayers (often friend and family) who mean well, but serve only to pull you down.

Good luck on your idea!

Ever gone into AdWords and seen stuff you hadn’t seen before?  Google likes to keep releasing these features and not telling anyone about them– maybe to keep us on our toes or to use the general public for beta testing?  Anyway, a couple days ago, I blogged about sitelinks in AdWords– that you can specify up to 10 links underneath your regular paid ad if you happen to also in position 1.  I took a screenshot to show you:

What will likely happen is that advertisers in certain markets will now have a crazy incentive to bid to first position, which could cause a cascading effect on bid prices at any position.  Do you think Google anticipated that?  You betcha!  The reward being dangled out for first prize is so great than it will lure even ROI-focused advertisers into the fray.

I’m not going to get on a soapbox on Google being evil or about PPC prices continuing to rise.  But I will say that for smart search marketers, you have an increasing opportunity to DOMINATE Google search results.  Just imagine if you already have the #1 organic search result and then have the #1 paid result with 10 sitelinks?  Check out my earlier post to see what that looks like— and then consider how you might get there, too.

The opportunity to win in local is even stronger, since you will soon be able to pay monthly listing fees to be in Google local search results.  If you’re not aware, the Google 10 Pack has now shrunk to the “Lucky 7 Pack”, to allow 3 paid ads to be shown on top.  Any economics undergrad could tell you that if you have dollars, Google will find ways to reward you for spending them. The days of organic SEO in local are not over by any means– but put your capitalist hat on if you want to see the trend.

Bruce Clay and I had a conversation about this at PubCon and he remarked it ironic that Baidu was going in the opposite direction.  The dominant Chinese search engine was moving from a SERPS (search engine results pages) that was mostly ads to one that would be mostly organic results.  Baidu had not even marked what were ads versus not.  Funny that both giants would be going in opposite directions.

Meanwhile, if you’re building a business serving local clients, you better get with the program.  You can integrate your GLBC listings with your AdWords, Google Analytics– and now get Webmaster Central and Website Optimizer API access.  If you want to see what BlitzLocal can do for you in local directory submissions and geo-multiplied PPC templates, give me a holler.

Some affiliates are losing millions per month, I’m told, as a result of my TechCrunch post.  And Shoemoney has not been shy about his willingness to write blog posts for money. If someone is about to ‘topple an industry’ (highly unlikely), one strategy is to trash his credibility and scare him into not writing anymore.  But what I didn’t expect was that folks like Jeremy Schoemaker would be out for blood, misstate facts, and even email our advisory members.  I reached out to him, to give him a chance to explain why he would go so far out of his way– so far, no response.

Let’s clear a few things up:

• Scott Richter does not have ownership in BlitzLocal. Yes, we were in his building.  No, his dad never threatened to sue any of these gossipers– he’s got more important things to do.  Yes, Scott has paid for many meals and entertainment.  No, Scott did not cover Jeremy’s travel and lodging to come see us– that was 100% paid for by Blitz, including the loan we made him at Affiliate Convention in Denver when he had no money.
• Gillian Muessig has no ownership in BlitzLocal and is not employed by the company. She is a friend, colleague, and mentor– since she knows how to navigate the waters in building fledgling companies to industry leadership.  She is the President and co-founder of SEOmoz and Rand Fishkin is her son.  SEOmoz is her baby and she has said so quite plainly– why wouldn’t she take this company all the way?  I respect her deeply for her insight and integrity, which has carried her company to where it is today.
• I’ve written a lot of articles. You’ve probably read some of them, maybe without knowing, as I wrote under other people’s names.  For example– a number of ad serving posts, as well as most of the ShoeMoney Xtreme guides. Look at the examples referenced in the articles and compare the writing styles if you’re not sure.
• We’ve been burned a number of times: This is common in affiliate marketing.  What’s not as common is someone that I’ve had deep respect for and trusted, such as Jeremy, do that to us a couple times, then claim the reverse.  He is a prominent blogger and a lot of folks look up to him– therefore, he should be careful as a role model.  Yes, the Facebook whitelisted account was his.  He called me up while at Facebook and agreed to a 50/50 revshare, so I assigned 2 full-time employees to that account.  After a ton of Russian brides and dating ads, and a few hundred thousand dollars in revenue, BlitzLocal was left with no earnings and Shoemoney took 2 employees. We lost a lot of money, which hurt a small business like ours, but we did not pursue him.  His recollection is different, although the email trail and IM chat logs of these employees tell another story.

I’m owing up to all the spam (or call it by whatever name you want) that I’ve done in the past. The TechCrunch article was part of that– and there are more articles coming.  Facebook has done a commendable job in shutting down loopholes– but there are many, and the players are so clever.  Are these players still making money?  Certainly.  Could we have?  Perhaps, but we didn’t. And whatever money we did make was spent on building our local platform– let me tell you that the road to scaling up real clients, especially in local, is hard. We don’t have much money.

I would be naive to think that I have enough power to shut down an industry– I am just one guy and BlitzLocal is a tiny company.  Would you ever fall for a MyLuvCrush ad?  The folks who read this blog do Internet marketing for a living, and I know you’re not falling for it.  At the same time, don’t fall for a hate-motivated piece– examine their motives and then check the facts to see if things add up. Jeremy mentioned that the reason the picture of sheep is the default avatar on his blog is that most will blindly follow whatever he says and not think for themselves.

One thing that has surprised me is the amazing support we’ve received from white hat folks, small businesses, industry friends, and the press. How folks have reacted to events of the last two weeks clearly define if they’re black or white hat.  If you’re an affiliate running deceptive stuff, you know that profits are hit-and-miss and that there’s often high school drama involved.  We did some consulting for the FTC– a nice surprise, as they promised not to sue.  The local and agency work is steady, the people are easier to work with, and you can feel good about what you’re doing. Ironically, we’re helping build a new form of affiliate marketing– it’s the local space. If you define an affiliate as someone who gets paid to promote someone else’s product or service, then you’d likely believe that Russian brides is out and local is in.

There’s two sides to every story, so consider the facts and make your own decision.  Meanwhile, I’m getting back to focusing on local. If you want to build a real business with local clients, I’d love to hear from you.

Borrell Associates predicts that in 2009 local online advertising will hit $14.2 billion, while 2010 will be only $14.9 billion– a measly 5% increase.

I would agree that local online ad dollars are not going to grow in the near term– the reason not being hyper-competitiveness, but the exact opposite.  Ad dollars on Google AdWords and Facebook are squandered so badly that why would any business want to throw good dollars after bad?  If Fortune 500 companies can’t get their PPC and listing campaigns right, what chance does a mom-and-pop have?

Enter small advertising agencies, who themselves are local, serving local clients. Arm them with templated PPC campaigns, templated listings processes, templated wordpress site creation, email autoresponders, and all the rest.  Make it idiot-proof, such that anyone (your mom, for example) could do it.

I don’t believe that the giant agency will be able to compete against this new breed, since a call center employee is not as powerful as someone living in your neighborhood who is well-educated, really cares, has less overhead, and is more nimble.  After all, if you’re a one-person agency and are relying upon that income to help support your family, you’re going to take your role more seriously.  You have to see that client face to face– so you better do a great job.

But to empower this hidden or underemployed workforce– the JetBlue moms of the world– a company needs to step in and create a system that is so simple and so powerful that even the ShamWow guy would be impressed.  That is the goal of BlitzLocal and watch as we roll it out over the next year.

You can build the most awesome software, but if you can’t get it in the hands of these analysts– who are franchisees– then it’s no good.  This is the equivalent of the “last mile” problem in telecom.  It’s less a software development problem than one of organized processes to find, train, and manage this workforce.

The definition of local advertising is starting to change as well.  Are industry journal counting Facebook for local, which is now 74% of their 2009 revenues?  How about the services popping up to get businesses listed in the various on-line directories, such that they can increase their number of citations — thereby showing up in maps?  What about video and other types of user generated content?

Thus, on an apples-to-apples basis, the traditional Internet marketing ad channels won’t grow– and neither will the mega agencies that are trying to scale them.  They churn out customers too fast.  But overall, I predict tremendous growth of the one man (or one woman) shop– an army of nimble, hungry folks who will be savvy in using Facebook, Google AdWords, and every other marketing channel available to them. The economy is ripe for some massive entreprenuership in 2010.  Are you a stay at home parent looking for something other than the next Tupperware, MLM, or Acai scam? Maybe you’re looking for some part-time income but were afraid of computers– or are tired of licking stamps.

If you want to join us, send an email to dennis@blitzlocal.com and tell me why.

Between my personal blog and that of BlitzLocal, we’ve gotten about 23,000 hits in the last 24 hours.  The TechCrunch Effect is when TechCrunch covers your site, typically on launch day, and brings it down from massive traffic.  And you often generate media buzz, with many companies then being acquired.

Fortunately, we didn’t go down– as we were prepared in advance for the 100k-300k hits that sometimes strike from a TechCrunch post.

The article drew 315 comments so far– polarized between mudslingers and applauders, with the applauders slightly winning.  Let’s talk about what these folks were saying, bucketing responses into generalized categories:

Applauders

• Hooray for exposing the spammers.
• What? You mean that Acai Berry doesn’t work and that it isn’t free?
• When is the next article in the series coming out?
  

Mudslingers

• Ads are not spam– there’s a sucker born every minute.
• Stop outing what I do– I’m trying to make money spamming.
• Dennis and his BlitzLocal crew have the cooties and can pound sand (that’s not what they actually said, but you can insert your favorite personal insults in there).

What’s these people are saying also says a lot about them.  Let’s start with the vocal minority.  There are affiliate marketers who feel the need to defend the flag of affiliate marketing.  Remember back in 1999 when David Howard used the word “niggardly” to describe a stingy budget package?  Jesse Jackson and prominent members of the black community were up in arms, citing racial slurs.  This fellow was crucified over the ignorance of others– since niggardly means small and stingy.  No racial overtones, though it’s similar to another word.

My TechCrunch post was about the ecosystem of ad networks, Facebook, advertisers, and app developers– how Facebook has been striving to shut down deceptive ads (it’s the whack-a-mole game), and how virtual currency can perpetuate this behavior.  It ends with a positive note on how local advertisers and brands would come on the scene and squeeze the current affiliates out.

Is all affiliate marketing bad? No, since an affiliate is anyone promoting an offer that isn’t theirs.  Look at the e-commerce offers on Commission Junction and LinkShare.  Those are products we can be proud of.  Same with promoting local businesses.  If you’re helping small businesses with their Internet marketing, you’re a local affiliate marketer.

The folks who are complaining– are we ruining their livelihood? No, since the article is written from the viewpoint of someone running an ad network.  There aren’t that many of us. But it’s interesting to see folks complaining about a view they don’t even understand– they’re not even the subject of the article.  You might as well boo if your favorite pro football team loses– though you had nothing to do with their winning or losing, as just a faceless spectator.

Hence, a niggardly response– ones that exposes children playing schoolyard games and attack from the shadows.  There is one thing about arguing in Internet forums.  If you stoop to their level, you’re no better than them.

For those who want to post a thoughtful response, feel free to write one using complete sentences and proper grammar– then email it to me and I may post it.  Or call up Michael Arrington and tell him you have a counterpoint. Or post your response directly in the article comments– then see what everyone else thinks.

I knew when posting the article that some affiliate marketers would be offended. But I also knew that this would help solidify BlitzLocal’s position as Facebook advertising agency.  The number of media inquiries and large brands in the last 24 hours have been amazing.

A number of folks are also inquiring about joining the BlitzLocal team– I’d welcome anyone that wants to make a decent living serving real businesses, as opposed to pushing Russian brides ads. It might not be as much money as spam, but it’s an honest living and one that is in an area of growing importance.

I’m grateful for the the good folks that I get to work with and friends like James Hong who gave encouragement, as well as Facebook themselves.

It’s bad enough that there are over 60 million users (including me) wasting real time and real money growing virtual crops to earn virtual points.  A new article in TechCrunch blows the doors on an industry that is set to generate over a billion dollars in 2009 (source: Nick O’Neill of AllFacebook.com).

Look out for a guest article I’ve written, which will show up either on TechCrunch or AllFacebook– which goes into the mechanics of ad network earnings on both the virtual currency and social ad side of things.  It’s 7 pages long and 2,478 words.

Networks like OfferPal and SuperRewards don’t have long until they’re busted for what’s really going on.  And if you’re a publisher doing more than $20k a month and want to do better, contact me privately– I have options for you.

Meanwhile, keep playing FarmVille– it’s addictive as hell!  I’m at level 30 now and having a great time.  My advice is to grow grapes, as they have the highest profit for any 1 day crop.  If you’re patient enough, just buy a ton of hay bales and sell them.  Buy 200 hay bales, which cost 100 dollars each and get you 5 experience points, and you earn 1,000 experience points.  For the same $20,000 you’d have to spend $100,000 on a windmill.

So what’s your view– a user who doesn’t care, someone who thinks Farmville is a stupid waste of time, an affiliate marketer who wants to cash in on this somehow, or a game developer that is looking for a better way to make money?  Love to hear your thoughts.  I will respond to all comments here.