It came as quite a shock to see Performancing abruptly shut down its advertising network yesterday. Since I often chat with Chris Garrett and Nick Wilson about various things, I’ve known that there have been serious cost issues, especially related to maintaining the huge server expense that the free Metrics service caused. Unloading Metrics simply had to happen, but I expected the Partners program to carry on, even after Nick resigned.
I think people are surprised that such a high-profile company could fail. After all, they did everything right—scores of valuable content, the Performancing for Firefox blog editor that resulted in untold amounts of back links, and other remarkable free services.
However, there are two things to note:
- Most new businesses fail. It’s no knock against anyone involved with Performancing that things didn’t go as planned. They thought big and went for it, but more often than not things just don’t work out.
- Unlike most Web 2.0 companies, Performancing actually had a business model that didn’t rely on eventual acquisition by Yahoo. Despite that, they were still done in by the tyranny of free. “Free” can be awfully expensive for the company providing it if the revenue projections don’t pan out.
When I started Copyblogger a year ago, it was because I saw that creating compelling content for social media was a huge opportunity that existing businesses could use to transition away from ineffective advertising. The concept of providing a resource to these folks seemed like smart business to me at the time, and it still does. The fact that I cover conversion as well as attention speaks to an integrated approach to marketing that’s always worked well for me.
The Web 2.0 thing has been a bit of a humorous sideshow. I’ve always expected Michael Arrington to do two posts about the vast majority of Tech Crunch featured companies—one for the debut, and one for the demise.
Attention, traffic, links, subscribers, search engine rankings… all of these are crucial to a successful online marketing strategy. But it’s all for naught if you don’t end up with a profitable business when the dust settles.
When devising online promotional strategies, the emphasis should not be on making the biggest traffic splash. It’s about getting the right kind of traffic, authority links, subscribers, and search results that will ultimately convert into cash.
So before you launch a link attraction campaign, ask yourself a few questions:
- Will this publicity stunt reflect well on my business?
- Does taking this controversial stance bring me anything other than notoriety?
- Does this “Top 10 list” have any value after the Digg is done?
- Will creating this widget bring me customers, or just high development costs and meaningless traffic?
Any marketing—whether online or off—that occurs in a vacuum is usually a waste of time and money. Make sure your promotion is in line with conversion.
Reader Comments (16)
Thinking big and going for it, while admirable, may not be the best choice for business success. There seems to be a time crunch urgency for net based companies to get ramped up as quickly as possible – whether the goal is gaining a higher user base or higher traffic or the hope for being acquired. Perhaps a better strategy would be low cost, start small, grow more slowly and turn a profit every step of the way. And of those who fail first, numerous players come in later, sweep up the wreckage and make a better go of it the second (or third) time around. Being first isn’t always best.
I enjoy your site very much.
David Krug says
The thing about new businesses is. Failure isn’t a bad thing. In fact its usually good. It creates a healthy environment for success for someone eventually.
Often usually people that failed before.
Leonard, wise words, and thanks for reading.
David, yep. I’ve built three successful companies and had lots of winning projects, but my failures taught me the most.
Roberta Rosenberg says
Always sad when a promising idea fails to sustain. But it just means failure today. Some retooling, rethinking, and who knows? These are the stumbling steps to something far better with stronger, sturdier legs.
Ultimately though, when you sweep away the noise of Web 2.0 and the rest of the yada yada, it’s all about building a business. (I’ll let someone else make the revolution. I’ll be happy to own the concession stands that flank the parade route.)
John Wesley says
Agreed. The social sites are a bit of a trap. The traffic surges are addictive, but when they’re gone they’re gone. It’s more important to produce consistently valuable content that builds value over time than to chase the controversy that the social sites love.
Andrew Cavanagh says
You know it goes beyond just profits. The other factor you really want to look at is “does this promotion or web 2.0 method really help my clients closer towards the end goal I hope to deliver them?”
When you have an overall business strategy based on making profits out of genuinely being of service you’re less likely to make costly meaningless mistakes.
Martin Neumann says
For me it’s still about basic business: Business is about making a profit. Find a want for a market and fill it.
Web 2.0 and all the faddish things we got today are just one part of our overall marketing toolbox.
I’m very blunt in my usage of current technology (aka web 2.0) for my business – if it doesn’t help the bottom line then it’s out.
Now the problem lies in that some of these tools are used to engage better with prospects which ultimately should lead to a better bottom line.
The hard part is knowing when it stops helping the bottom line.
Jon Morrow says
This is why I continue to invest all of my money in real estate.
Over the course of the next few days, I’m sure people will publish bunches of opinions as to why Performancing is having problems, but I don’t think anyone really knows. Not because the Internet is a blackbox, but because it’s evolving so fast that the rules of business change before we finish learning them.
Real estate is exactly the opposite. The industry is so old and stable that failures are much less. When a project fails (and they do), you can usually see it coming months in advance and prepare for it. And if you can’t prepare for it and go under, then you usually know exactly what killed you.
So, I think you’re right–traffic is meaningless in a vacuum, but I think there’s a larger lesson. The majority of businesses (and web sites) don’t fail because risk is an inherent part of the process; they fail because people don’t know what they’re doing. And most people will never understand what they’re doing as long as the rules of their marketplace keep changing.
That being said, I think copyblogger is a success because a) you understand the Web better than most, and b) it doesn’t take much money to maintain it. If I remember correctly, adsense didn’t work out for you, but because your overhead is so low, it didn’t really matter. You can afford to fail.
Performancing, on the other hand, couldn’t afford it. In my opinion, if they want to innovate, then they need to do it with a very low overhead or go find someone like Yahoo to back them, that can afford to fail on nine out of 10 projects. Otherwise, I think the shifting marketplace will beat them every time.
I would add one thing:
Permission marketing (wonder where I heard that before) – If the widget/tool you are developing brings its users/their readers in constant contact with your messages (content and marketing) thats a huge benefit. Especially if they are in synch with the products/services you are selling or planning to sell.
Neither the Firefox Plugin nor the stats package performancing gave away did that.
Jim Logan says
I have no idea where Performancing’s problem was rooted, but there’s a good place to start looking.
Small companies with deep pockets can afford to give things away and find a way to break-even later. Remove the deep pockets and you have big problems. No matter how good you are.
Regardless, it’s a shame. I like Performancing.
I also like your four tips for a link attraction campaign. As a commenter mentioned earlier, links and stats can be addicting. But at the end of the day what do you have? For most business bloggers, it’s better to focus on a long term connection with a subscriber than working for bursts of traffic.
Paul McEnany says
I’m just planning on posting a bunch of pictures of naked women and saying the word “porn” a lot. In fact, I think I’ll change the name of my blog to pornblogger… 🙂
Small Montreal Hotel says
Sad to see Performancing go like that. Many Montreal based businesses I’ve seen have also failed though, with the people behind them learning and starting afresh. You make a good point about conversion, but I think (and this is something you notice in a city like Montreal with lots of culture and tourists), that a lot of it is dependant on your philosophy. It’s perhaps the fact of being a hub in the blog community rather than being a business in the blog community – basically that they didn’t have a defined business plan. JMHO though.
I think that all holistic approach will be positive.. we can check in all aspects of life.
hugs from brazil
J David says
Very good article, although the word ‘Holistic’ makes me think of things like herbal tea and food without preservatives; gross…
Brent Hodgson says
Succinct, and dead-right.
You wrapped up the fundamentals of online marketing in that last line.
WD-NYC designer says
I’m glad i read that article, also have same opinion about that, every one should ask those question before starts anything on net.
This article's comments are closed.