Website value calculators are not appropriate for all website valuations!

There has been a mushrooming of website valuation calculators that purportedly calculate the value of websites. Most algorithms claim that they use a host of freely available information over the web such as back links, page views, rankings and other similar information to calculate the value of your website. Then they also also claim that they "estimate" how much advertising dollars the website will generate on all of its pages and use that as the revenue measure. The issue with such a calculation is that the calculators are applicable only for websites that has advertising as its primary source of revenues. Websites that do not use ads as primary sources of revenues but rather to attract work or as an advertising in itself, which is what most websites are, cannot be valued this way. Over reliance on the use of advertising as the revenue source misleads people into thinking that their websites are valuable when they clearly are not. This also spawns numerous advertising only websites and contributes to plenty of junk redirects out in the Google search space. Upon a deeper look at the "automatic placements" by Google in our AdWords account, we found that 70% of the websites are junk websites solely created for the purpose of advertising redirects. What purpose do these websites serve? This is a main reason why we get a lot of what we call junk clicks. The reason many of these redirecting websites exist is because they are under the false impression that their websites or businesses are valuable based on a stream of Google AdSense dollars. Surely, traffic redirectors cannot be worth as much as traffic from quality websites. But I do not see any differences in CPC between clicks from redirectors and from quality websites. Of course, a click from a well vetted, reputable website is worth several times more than a click from a traffic redirector website that is setup solely for the purpose of capitalizing on the ad commission spread. I am not sure if AdWords can set up algorithms that reward authenticated, respected websites more than the others. Only very discerning customers visit our website and therefore our traffic is low but at the same time, the customers who come on our website are perhaps serious customers and if they click on an ad on our website, the probability of conversion is several times higher than on a redirector website. So, is the value of our website low? That's what the website calculators think and therein lies the problem with the ad model. We need to be paid out a higher cost per click than a redirector website. We qualify prospects better, yet perhaps we do not get rewarded for that. I hope Google introduces a system where quality information is rewarded much more than opportunistic, junk traffic.

Does Google click for you? Are there link frauds, bid frauds and click frauds?

I have learnt quite a bit from using Google Adwords for my advertising campaign. I have been able to tweak key words  and write blogs that have pushed Accuserve to the #1 result when the keywords "409A valuation", the most relevant keywords for our business, are used in the search engines. My blog results also show up as #1 for that keyword. But here's the problem: Google seems to want me to increase my ad budget to capture all clicks. But the clicks I currently have do not translate into much sales and therefore I have concluded that Google advertising works only for direct business-to-consumer type businesses. Since most business decision makers would go beyond just ads to learn about a company, I believe that for product purchases that require credible decision making, Google Ads may not be that relevant. In my business, if the first 20 clicks do not get me business, I wonder if the next 20 would. Therefore, its not a numbers game for me and increasing the budget to get more clicks. Increasingly, more clicks are being provided by ad placements in targeted websites rather than generic search engine searches. I wonder if the buyers are making their decisions more through credible gate keeping websites than just looking at Google ads directly. In a way this is good for our business as we maintain our credibility by attracting buyers that visit specific gatekeeper websites. The cool thing is that AdWords provides a nice way to target these gatekeeper websites. Managing your brand and reputation is key and it is important where and how your ads are clicked. This has been a key takeaway for us. My advice to businesses that provide services to other business (B2B) is to take a hard look at data. If the first 20 clicks on ads displayed alongside search engines dont get you business, the next 20 most certainly wont. While Google prominently recommends increasing your ad budget, I believe that B2B service providers may not necessarily benefit from that. The right thing, perhaps, to do is build your brand through insightful knowledge conveyed through blogs and making others link more to your site, leading to displaying of your site at the top of the search results, because that's how Google algorithm works. But it appears that the system can still be beat. What if you pay to get a lot of people to link to your site or aggressively promote your links to be embedded within others' contents for a generous payment. Garbage in, Garbage out at action here. While you may get traffic to your site, you'd probably wont get much business out of this junk traffic.
It becomes important to spend your budget in a way that minimizes junk traffic or traffic that dilutes your brand - easier said than done in the way AdWords is setup right now. Many of our keywords' bid prices are going through the roof and I just dont see that much competition in our industry, given the specialized nature of our services. This leads me to question if there are bid frauds as well, aimless junk traffic bidding up the keywords, in return for some payment. Right now, the advertisers seem to be not complaining much, perhaps, because even with junk traffic there are some business returns. But, are your returns from selling your product/service or by becoming part of this junk ecosystem where you participate as well, making Google a commission based enterprise? Some points to ponder, dont you think? Do we want Google to be a positive economic value adder or just a market place where we all keep paying each other to keep generating ad frauds? This reminds me of Wall Street and how artificial returns were created.

Apple's iPhone business

In an investor call with W.R. Hambrecht (WRH), we learnt the following about Apple's business. WRH expects that Apple will sell about 3 to 4.5 million iPhones per quarter. People who need to create business models to get financing for their iPhone APP development can probably use that input. WRH, however, says that they haven't heard from inner circles or anybody else that iPhone apps would turn out to be a major driver of iPhone sales. The analyst firm pointed out that Apple was trading at a 13-year low P/E and it is probably a good time to buy. We tend to agree with that. Further, the Android phone from Google is not expected to compete with the iPhone even though AT&T may offer the Android phone as well. We have to point out that Apple's iPhone revenues are only about 5% of its overall revenues. Apple continues to be a Mac company with 35% to 40% revenues coming from Mac and relates software sales.