Returns for online investments are still so much greater than the offline world that it is easy to think that the money is somehow less real, or that there is greater risk to it. That perhaps we should diversify out of the web to help make our businesses less risky.
Sure, the shift of a few rankings can kill some businesses. But most websites are not so reliant on any individual keyword that their business lives or dies by it. And when algorithm updates happen sometimes one type of page on your site will drop while another type of page goes up – with the net effect being a wash. For strong, well-established sites, the search game generally tends to be far less risky and far slower moving than it is made out to be.
Might Google enter your market? Or block it? Absolutely. But you can prepare in advance by differentiating your content and/or your business models in ways that you know Google won’t. For example, Blekko is a beta search engine co-created by Rich Skrenta which is building a business model on transparency. It won’t be easy for Google to match that without changing some of their fundamental philosophies about search. If such opportunities exist today within search, then they exist in almost any market.
With a low risk offline business, you could always run into loans being called, zoning issues, legal regulations, government regulations on health care increasing your operating costs, landlords jacking prices, construction, slowdown of the local area leading to crime, a deeper pocketed competitor which practices price dumping, miss investing in a key productivity technology, etc. The entire monetary system is warped to benefit few at the expense of many. There are real risks to any business, but the fatter your margins are and the more flexible you are, the easier it is to survive sharp changes in the market.
I have a retail client whom I have worked with in a profit share relationship for about five years. The recession created by the collapse of the real estate bubble certainly hurt sales and profits, but because we had low fixed costs (hosting, SSL certificate, a few ads) and flexible variable costs (mainly ads & a few other items that were directly tied to unit sales) we were able to run lean and mean and still keep the business profitable throughout the downturn.
Multiple competitors who run brick and mortar shops went bankrupt, driving up our share of the smaller overall market. Other than flexibility and efficiency, there is not much difference between a drop shipper and a company which manages stock.
Staying safe outside of search
Even if you do get burned in the search game, there are other ways to diversify online:
- build brand awareness
- build repeat distribution outside of search (using content, social media, affiliate marketing & advertising)
- run specials & promotions
- build websites in other verticals (perhaps even some counter cyclical ones)
- re-purpose content for sale or to wrap in information
And the beauty of building up those additional channels is that they less reliant you are on search, the more likely search engines will be to trust & rely on your content. And when they do that, so do users – sometimes too much!
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