Any moron can make money with new media where only little folks play.
But when the big, dumb, brand advertisers arrive – as they have in PPC advertising – the media cost skyrockets and that’s that. This should never be a sudden surprise – or a gradual one, either – to anybody with even small quantities of small business marketing knowledge, historical perspective and common sense.
The Big Lesson is what immature, under-priced media giveth, mature, over-priced media taketh away.
For a while, independent specialty retailers in jewelry, handbags, shoes, spicy foods, even electronics had this space to themselves, so search ads that popped up when someone typed “diamond necklace” or “DVD player” worked.
Now that BestBuy, Zales’ Jewelers, etc. have arrived in those categories, buying with little regard to direct ROI, the price per click on such ads has risen to unprofiable numbers. And that will continue to worsen as even bigger, dumber companies cheerfully pay more.
Google’s not worried. While the small fry search advertisers may be leaving them, General Motors and Wal-Mart are moving in, and that gold glitters brightly to owners of media. Little does Google know how that can eventually destroy your media prices and margins; when a media becomes dependent on a small cadre of giant ad buyers, the power shifts and the buyer sets price, not the seller. The big fish will eventually refuse to pay per click at all and insist on fixed rate advertising – once the small fish are gone.)
But the Bigger Lesson here is NOT about search ads and pay-per-click advertising or the Internet. It isn’t even about the ways of media.
The Bigger Lesson is about the utter foolishness of operating a business (or living) as if things are going to stay the same.
Not globally, not locally, not in any way whatsoever. Certainly not with whatever means you use of acquiring customers that is generous to you at the moment.
The smartest entrepreneurs I’ve ever known react to something working wonderfully with nearly instant fear and even loathing, as the success is their mandate to urgently seek its replacement for the day when it comes apart at the seams. Worse yet, they are so visionary they can see why and how it will, that others cannot.
If you can’t stand the thought of living with such extreme paranoia, then the only other intelligent option available to you is the one I usually preach: profit from having many doors open through which customers walk, be dependent on none of them. If you now get more than 20% of your customers from any one source or any one ad media or any one anything, you should be very afraid, very, very afraid. And doing something about it, before it’s necessitated by a sudden surprise.
The savvy retailer or restaurant owner who finds he’s in an exceptional location immediately strives to extend his lease for a longer term at the fixed rate or buy the building or buy a building near-by, because he can see the big chains and development arriving to skyrocket rents. (Ask Bill about the financial value of very long leases and getting paid just to leave.)
The company with success in infomercials does what Guthy-Renker did; invests profits in developing non-TV methods of selling the same products; moving from one category to a different one where continuity can be had.
The successful online merchant does as 1-800-Flowers did; seeks success offline. The successful offline merchant, vice-versa. For the smart, these moves are not just opportunistic; they are paranoid. For the real leaders, every celebration is marred by the guy marching around with ‘The End Is Near’ sign observed out the corner of one eye, through the distant window.