Archive for December, 2008
The web has been flush with various reports of major online advertising networks getting far more aggressive to prop up their revenues as the current economic crisis causes online ad spends to decline. At the local level we saw ad spend decline for small businesses too.
Some prime examples;
- Google allows beer and hard liquor ads, just before Christmas no doubt.
- Ask.com becoming an arbitrage play for Google
- Goggle now offers domain parking services to display Adsense ads
- Federated Media slashed ads rates for holiday season
- Google running it’s own internal arbitrage play
Here in Canada I just noticed a MAJOR publisher, the Globe and Mail, one of Canada’s largest newspapers, if not the largest, using ad display methods that force a click in order to read articles in the Report on Business. And there is no little opt-out X to close the ad.
I just finished up a great new website for Tod Mountain Ranch in British Columbia. They are a guest ranch offering horse riding vacations. The lodge and cabins are still under construction and are set to open this coming spring in 2009.
Two months ago Google rolled out its new version of iGoogle. Some interesting new features. And a few well hated changes. And I do mean HATED. I wrote a pretty popular post about those changes and the dreaded left tabs. So far that post has received 100 comments from others complaining. And the suck still persists
I have a fair sized monitor so I can live with the piss poor tabs on the side (c’mon Google, it really is not hard to put them back up top. Just a lil bit of CSS code). But what continues to annoy me, aggravate me, even piss me off, to the point of yelling very fine expletives at my computer, are the problems with Gmail. The iGoogle version of Gmail.
With the BIG THREE on the verge of collapse, bailout packages in limbo, GM shutting down North American production for the month of January after already shutting down South Korean production last month, and now a battle is brewing between the manufacturers and the unions, the car industry is in dire shape indeed. There are big changes on the horizon.
Too Many Vehicles and Too Many Brands
GM is still guilty of producing duplicate brands of many of its vehicles. You can get the same car under the Chevrolet brand and the Pontiac brand. This effectively doubles marketing costs, raises production costs to produce 2 slightly different body styles, and pits the two brands, and their dealers in competition with each other. Stupid.
The drastic production cutbacks are in response to the glut of inventories of new cars sitting unsold on dealers lots. The industry was overproducing as car buying slowed.
Seth Godin thinks we need more car brands, many more brands. He wants to see turnkey car businesses that are as easy to start up as a website business. And as he put it “Use the bankruptcy to wipe out the hated, legacy marketing portion of the industry: the dealers.” He’s only partly right.
Car Buyers HATE Car Dealers
I hate car dealers. I hate car dealers. I hate car dealers.
Every experience I’ve had buying a car from a dealer they’ve tried to rip me off. I hate car dealers.
You know who should do an expose on car dealers and how they rip people off every single day? The local papers and local TV news. Oh wait, a HUGE portion of their revenue is ads from car dealers. Crap.
Did I mention I hate car dealers?
People hate having to haggle on pricing as most of us are not good at it, meanwhile the salesman can spot us suckers from a mile away. But the internet is changing that.
Car Dealers Embraced the Internet and Local Search
In the realm of local SEO new and used cars are up there with real estate agents as an ultra competitive sector of the search marketplace. Through the internet people can do a lot more research on their vehicle choices before they even speak to a salesman. Many are also now armed with dealer invoice pricing and tips on how to deal with sales people, found on the net.
AutoTrader.com states that their business is still steady despite the recession. Sure, car dealers may be funneling more of their marketing dollars to the net vs. traditional local media but when 700 dealerships have gone bankrupt so far this year in the US (projected to be 900 by year end) I have doubts about their projections. If GMAC goes bankrupt GM may loose 40% of its dealers, that’s another 2600 dealerships closing.
Dealers are dropping like flies and the best rankings in Google won’t help them as buyers are afraid what a manufacturer’s bankruptcy may mean for warranties on a new car or truck.
The New Model : Vehicles Made to Order
As Seth Godin rightly pointed out- the legacy marketing portion of the industry will change. Dealerships are not only hated, they are a poor business model. The overheads involved in that business are crazy. Millions of dollar in inventories sitting on the lot waiting to be sold, large buildings housing too many salesmen, the dreaded business office where they try to sell you overpriced unneeded things like rust protection, undercoating, fabric guard, etc… There is a better way and I’m sure it’s coming.
Dell does it with their computers. You choose your model and it’s options online and the unit gets made in the factory and shipped out to you. Why can’t cars be bought the same way?
People already do most of the research part of shopping for a new car online. Why can’t the manufacturers and dealers websites have a “buy it now” button and you’ll never have to speak to a salesman. Need financing? Apply for it online on the same site. Two weeks later your new car arrives.
I mentioned this to a friend of mine who is a car salesman. At a GM dealership no less, owned by his father, so he has strong bias. He adamantly rebutted me. He’s of the old school idea that the salesman is the most important part of the transaction. This is the self preservationist knee jerk reaction that will come from the industry, but it will loose that battle eventually. People hate the dealers and the salesmen, remember, and would embrace a change.
For those people who still want to deal with a salesman the new model of dealerships only need a couple staff and a computer terminal. Dealerships can downsize to a small office, no inventories on the lot. Maybe a few vehicles in a showroom and a few demo’s for test drives, that’s it. With such low overhead they can out-price a traditional dealer any day of the week. And one dealer can easily be selling multiple competing brands. Of course their service section will still be important.
No More Haggling Over Price
With a made to order online shopping model a fixed sticker pricing model may eventually become the norm. GM may have had it right with the Saturn brand and it’s no-hassle, no-haggle pricing. Granted that is not how it actually works. Saturn dealers still negotiate on price if it means moving a unit off their lot, or negotiate on the financing rate, or trade-in values, but generally Saturn customers enjoy the fixed pricing.
Saturn, it appears, is also already starting to experiment with the internet along the lines of what I think is coming. Ten Saturn dealers are participating in a pilot project where customers can use the internet to apply for credit, schedule test drives, set pricing, etc… Even trade-in values of used cars can be ball-parked online.
It Will Still be Local
There will still need to be a local dealer presence. It’s not about cutting out dealerships entirely with internet shopping taking place on the manufactures website. Internet auto purchases will be funneled to the local dealers. We car buyers still want to take a test dive at the very least. And there should be some continuity on the service side and honoring warranty claims.
It will take a while yet. The dealerships will resist it (change, yuck!). The manufacturers are not internet companies so they will botch the initial attempts, not understanding the web and marketplace. But it’s coming I tell ya.
Question is, will all 3 of “the big three” still be around when it comes?
I just finished reading Matt McGee’s post titled In 2009, Resolve to Own Your Digital Assets. Like that title? Note the similarity to mine? Well, his post got me to thinking about the doom and gloom recession we are in, and still to get deeper into, and what that may mean for website owners who do own their digital assets.
This recession is not simply about GM being a bloated dinosaur of a company long due for a complete overhaul, or sub-prime mortgages bringing real estate values back down to the long term mean, or even big banks in need of massive bailout packages. None of those are causes, they are merely symptoms of the bigger bubble that is bursting. The credit bubble. But I digress a bit, but only a bit, you’ll see.
So on to protecting your digital assets. Like Matt said, you should own your own domain name and not be using free hosting services. Domain names are cheap, only $10 per year. And for most small local businesses web hosting is cheap too. In the range of $5 to $30 per month.
Here is where you need to protect yourself. DON’T HOST YOUR WEBSITE WITH THE SAME COMPANY YOU REGISTERED YOUR DOMAIN NAME.
What Happens if Your Web Host or Domain Registrar Goes Bankrupt?
Some of the faster growing domain registrars and web hosing companies did not get that big that fast on organic growth. They did it on credit. Some of whom may rely on lines of credit to operate their massive data centers. Here is where some risk lies in today’s current credit crunch environment. As this recession goes deeper we may hear of some web hosting companies and/or domain registrars going bankrupt.
According to Google Insights, both ‘web hosting’ and ‘ domain name’ as search keywords show a steady decline for the past 4 years. Just last month Lycos Europe reported it is liquidating portions of it’s business, including it’s web hosting arm, in response to a 20% decline in revenues.
If you have both your domain and hosting at the same place you could be screwed for quite some time. Loosing traffic, search rankings, and trust with the search engines. Ouch!
If a web host goes under you can possibly loose all your data (page files and databases). Obviously you should have backups of your data on your home or office machine, not on the server. If your domain was registered with a separate company you could move hosts in a matter of hours, or at most 24 hours, if you really had to. Just set up the new hosting account, upload your data, and reset your DNS ( domain name server) settings to point the domain to its new host.
When a domain registrar goes out of business the domains under their control may eventually get handed over to another accredited registrar. At least that’s the theory. In the case of RegisterFly.com being striped of its accreditation due to fraud there was a lot of confusion and it took some time before a big chunk of the 2 million domains under their control were transferred to GoDaddy. Some people did loose domains though.
Domain registrars are required to carry $70,000 in liquid cash as well as comply to various standards set out by ICANN. So the risk of one going under is likely a lot lower than a hosting company. But, if a registrar were to go bust your domain will, for the the meantime, continue to point your traffic to the hosting server as your DNS settings remain intact until the domain gets transferred to another registrar.
Diversity is the keyword here. Spread the risk around between your host and registrar. Just in case.
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