Managing Algorithmic Volatility

In the recently announced Google update, I saw people tweeting things like

  • if you are afraid of algorithm updates, you must be a crappy SEO
  • if you are technically perfect in your SEO, the updates will only help you

I read this kind of lines and cringe.

Here’s why…

Fragility

Different companies, business models and business structures have varying degrees of fragility.

If your business is almost entirely based on customer service, no matter what you do, there will be a varied range of results for customers on any major update.

Let’s say 40% of your customers are not affected at all by an update and those who saw a noticeable impact there was a 2: 1 ratio in your favor, with twice as many customers improving that diminishing.

Is this a good update? Does that suit you?

If you’re doing nothing but customer service as a complete business model, this update will likely be for you, even if the net impact on the customer was positive.

Why?

Many companies are suffering after the Covid-19 crisis. Entire categories have been emptied and many people are looking for a possible reason to cut their budget. Some of the customers who have won big on the update may end up cutting their SEO budget thinking that they had already won big and that the problem was already solved.

Some of the customers who have had a hard time are also likely to cut their budget or call constantly to ask for updates and stress the hell out of your team.

Capacity use affects profit margins

Your capacity usage depends on how high you can keep your load steady when compared to what your load looks like during peaks. When there are big updates, the management or the founders can decide to work twice and do other things to temporarily cope with the increase in loads at peak, but this can still be stressful like the hell and eat away at your mental and physical health like sleep and exercise. reduced while diet worsens. The stress can be immense if clients want results almost immediately, and the next big algorithm update that reflects your current job may not happen until another quarter.

How many customers want to know that their investments have gone wrong, but the problem was that they had to double their investment when cash flow was tight and wait a season or two while keeping hope?

Fragility based on category

Companies that seem diverse are often not.

  • Everything in hospitality was cut by Covid-19.
  • In the United States, 40% of small businesses have stopped paying their rents.
  • When restaurants close overwhelmingly, it will seriously affect Yelp’s business.
  • Auto sales are down sharply.

Likewise, there may be other commonalities in the sites that are affected during an update. Not only could this include the category of business, but it could also be the size of the business, promotional strategies, etc.

The sustained benefits come from the strength of the brand, creative differentiation or systematization. Many potential customers do not have the budget to build a strong brand or the desire to create something truly differentiated. That leaves systematization. Systematization can leave imprints that act as outliers that can be easily neutralized.

Sudden changes can occur at any time.

For years, Google funded garbage like Spam automatically generated by Mahalo and eHow, each month being a new record. It is very difficult to say “we are wrong” or “we have to change everything” when it works month after month after month.

Then an update occurs and pouffe.

  • Was EHow decent in the first Internet bubble? Sure. But he lost money.
  • Was it decent after it was bought for a song and the paywall dropped in favor of using the new Google AdSense program? Sure.
  • Was it decent the day Demand Media acquired it? Sure.
  • Was it decent on Demand Media’s IPO? Certainly not. But there was a gap between that day and being penalized.

Panda Trivia

Panda’s first update missed eHow because journalists were so outraged by the story associated with the pump-n-dump IPO. They feared their jobs would be lost and displaced by this low-level garbage, especially when Demand Media’s market capitalization overshadowed the New York Times.

The journalistic coverage of the pump-n-dump IPO added credibility to it from an algorithmic point of view. By constantly writing hatred on eHow, they made eHow look like a popular brand, generating algorithmic signals that carried the site until Google created an extension that allowed journalists and other webmasters to vote against the site. for which they had voted during all their indignation coverage.

Algorithms and highly visible hand

And all the algorithmic channels like organic search, Facebook news feed or Amazon product pages are undergoing great changes over time. If they don’t, they become gamete, repetitive and lose their relevance as consumer tastes change and newcomers like Tiktok emerge.

Consolidation by merchants Attention

Frequent product updates, cloning upstarts, or direct acquisitions are required to keep control of the distribution:

“The rebellion startups benefited enormously from 2009 to 2012. But from 2013, the spoils of the growth of smartphones went to an entirely different group: the Empire. … A network effect to engage your users , AND preferred distribution channels to grow, AND the best resources to create products? Oh my God, it’s no wonder the Empire captured so much value for smartphones and created a dark moment for the Rebellion … Now, startups fight for only 5% of the first places The list of the best free applications is dominated by the incumbent operators. Facebook (4 applications), Google (6 applications) and Amazon (4 applications) EACH have as much applications in the Top 100 than all new startups combined. “

Apple and Amazon

Emojis are popular, so these features have been copied, these applications have been blocked & then applications using official emojis have also been blocked from distribution. The same thing happens with products on Amazon.com in terms of undercutting by a private label that has been funded using supplier sales data. Redeem your brand or else.

Facebook

Before Facebook’s IPO, a reflection buy Zynga shares was a roundabout way of investing in Facebook because gaming was such a big part of the ecosystem. This turned out to be a stupid thesis and a horrible trade. Sometimes other things tend, including quiz, videos, live videos, new, self-hosted instant articles, etc.

Over time, the general trend has been the decline in the rank of professional publishers, with a larger share of the inventory being friends content and advertisers. Ads metrics often overestimated their contribution to sales due to false math and selection bias.

Internet publishers like CollegeHumor struggling to keep up with changes and influencers awaiting agreement on Facebook had to monetize using third parties:

“I made 1.8 billion views last year”, [Ryan Hamilton] said. “I didn’t make any money on Facebook. Not even a dollar. “…” While waiting for Facebook to invite them to participate in a revenue-sharing program, some influencers have signed deals with viral publishers such as Diply and LittleThings, who paid the creators to share links on their pages. These publishers paid top influencers about $ 500 per link, often with several links published per day, according to one person who entered into such agreements. “

Youtube

YouTube had a Panda-like update in 2012 to prioritize the viewing time over the number of raw views. They also fine-tune news item ranking algorithms to favor important and reliable channels over content of the conspiracy theorist, alternative health tips, hate speech and ridiculous memes like the Tide pod challenge.

All unproven channels must start somewhat open to gain usage, return, and market share. Once they become real businesses they squeeze. Part of the repression may be editorial, imposed by regulators, or simply anti-competitive monopoly abuses.

Children’s videos were a huge area on YouTube (maybe still are), but that area has been cleaned up after automatically generated unwanted videos have been covered & the FTC cut YouTube to show targeted ads on channels that were primarily aimed at children.

Dominant channels may impose tied and grouped sales to eliminate competitors:

“Google’s response to the threat from AppNexus was that of a conventional monopoly. They announced that YouTube would no longer allow third-party advertising technology. It was a devastating decision for AppNexus and other independent companies. advertising technology. YouTube was (and is) the world’s largest ad-supported video publisher, with more than 50% market share in most major markets. … In the coming months, Google’s ad technology went to each of our customers and told them that no matter how much they liked working with AppNexus, they should also use Google’s ad technology to keep buying YouTube. bundling, and we had no recourse. Even WPP, our biggest client and biggest investor, had no choice but to start using Google technology. AppNexus growth has slowed and we were forced to lay off 100 employees in 2016. “

All the others

Every moderately large platform like eBay, Etsy, Zillow, TripAdvisor or the types of businesses above run into these kinds of problems with the change in distribution and the way they charge for distribution.

Integrate anti-fragility into your business model

Grow as fast as you can until economic craters or an algorithm almost guarantees you a crash and an inability to cope.

Markets and flows. And that would be true even if the above algorithmic platforms weren’t making big sudden changes.

Integrate options into your business model

If your business depends primarily on publishing your own websites, or if you have a mix of a few clients and your own websites, you have a little more leverage in your approach to updates.

Even if you only have one site and your business is going to shit, maybe you can at least temporarily hire a few other consultant clients or do some other work to make ends meet.

Focus on what works

If you have a number of websites, you can devote more resources to all the sites that reacted positively to the update while ignoring (at least temporarily) any site that has been burned cleanly.

Ignore dead projects

The cost of owning many websites is close to zero unless they use proprietary and complex content management systems. Waiting for a penalty until you miss obvious improvements on your winning sites is not a bad strategy. In addition, if you think the burned site is going to be burned perpetually (an alternative to health?), You can sell links or generate other alternative sources of income that do not directly depend on search rankings.

Build a cushion

If you’re saving money, you may be able to buy websites or domain names from other people who are afraid of volatility or who have been cut off for problems you thought you could fix easily.

When the tide rises, the debt lever limits your option. Savings offer you an option. Having slack in your schedule also gives you the option.

The person with a lot of experience and savings would like to see very volatile research markets, because these will eliminate part of the competition, reduce the investments of existing players and make other potential competitors more hesitant to enter the market. market.

Originally posted 2020-06-06 01:17:33.

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