Jon: Don’t build your business on rented land

Youtube is having a few bumps recently – to sum it up, they have too many partners (creators) trying to make money from a limited pool of advertisers which is causing the CPM (cost per thousand impressions) to drop. The result, you need MORE videos in an increasingly crowded market to make money, and by extension, a living. This is a loss for creators and advertisers alike.

I wrote earlier at how I thought Facebook was a broken model for companies and people, as they get increasingly targeted ads and more people on it, they also have a problem with advertisers, too much availability to fill which drops down CPM and by extension, they need to display more of them which in turn makes people not see the ads anymore as they are so easy to tune out.

What do these two situations – you have the same problem with Twitter etc.. btw – have in common? Businesses who build their model based on a platform they do not own and worse, have no other outlet! For me, YouTube is wonderful, they host almost 600 videos for me at no charge and better yet, pay me and cover the bandwidth which would be atrocious with over 2M views in my channel alone! My model isn’t built on YouTube, they just compliment it. Facebook is a different animal because they want to charge me so my followers can see my postings – why would I do that? Send them to MY WEBSITE where it’s “free” so that business model no longer works for me. Twitter and their kin, well, borderline useless but there is no cost to be there so why not.

I want to engage my customers and visitors on my land!

Advertising is dead?

I think this opens-up an interesting fact that social media sites such as Youtube have created – where the old advertising use to be “bug them till they buy”, that no longer works as it’s just too easy to skip over ads. I honestly don’t remember the last ad I saw because I’ve become so efficient at tuning it out. As I wrote a while back, I’d prefer having 1 customer visiting my site and buying something than a thousand who are just browsing around… the internet is great, but it has created a massive stomping ground of browsers who expect you to bend over backwards even if they have no intention of paying… each time I login to my online chat platform on CNCKing.com guess what I get asked… “can you give this to me for free?” or some deviation of this. Thankfully robots don’t know how to chat yet… more on that later.

I did give free stuff away a while back, the results? Nothing… I’ve come to the conclusion that if you don’t have 10$ to buy a file NOW to cut with your 50-100K machine, you won’t have it later. Put more bluntly, if you don’t want to spend money with me, then you don’t have a machine or business model that’s sustainable for me to enter into a relationship with you. What I do find interesting though is how adamant “free” has become on the internet – people promise me lots of future sales if I give my first for free etc… I tell them nicely that if they are willing to pay my rent or buy a machine for me, I’d be more than happy enough to give them a “free” model. They go away quickly as is the intention. This isn’t being insulting, it’s being efficient.

Advertising in the internet age can be summed-up with one phrase – too much supply, no demand. Regardless of money spent on production, people just do not want to see advertising, they live with it to get what they really want – maybe the Super Bowl is an exception but that’s just because watching football is so damn boring that you need something creative to keep your attention span going and even to me, neither has yet been of high enough value for me to watch.

Video Advertising

Much like Tivo when I was growing-up, people bought it because it allowed them to skip the ads, trueview is doing the same and YouTube is also offering this – the benefit? The people watching the ad are doing so because they want to see the ad or in my view, are busy doing something else and not paying attention… but that doesn’t sell video advertising. Usually when I’m “watching” Youtube or another media show such as Frontline (fantastic documentaries), if an ad pop-up… I immediately tune out and do other things.

I think video advertising before a show you want to show will be dying, the CPM won’t be high enough for creators to make a living and the ROI for advertisers just as dismal – hence the low CPM. Mid-stream and post-roll ads again are an annoyance and only use the “old” advertising method that we all tune out.

Curation is key

I don’t see people running out to watch advertising and buying stuff unless they really need it. When you have too much choice in a market, you end-up with confusion which leads to a requirement of curation. That’s what I see CNCKing.com becoming and by extension, CNCKingdom.com – a curation that distils the best out there so you find what you need when you want it. In the rush for internet riches where bigger is better… I think we’ve found that it isn’t necessarily the case. So what if Facebook has over a billion “customers” – how many are paying or better yet, how long before they jump because you are broadcasting too much advertising? They have a strong pull, friends and family… that’s their strength but also a major weakness and the next generation coming onto the internet have no interest in sharing their lives with their mothers and fathers publically.

Crowdfunding

Although I like the concept behind the crowdfunding business model, it really isn’t one… the tough part about crowdfunding is the amount of time and money you need to spend to have it go viral? How well did that viral video go for your business on YouTube? That’s what I thought… because so many people are jumping onto the platform, you can’t separate the noise from the value and hence, you spend more time spinning your wheels for less results on an exponential scale.

Like anything in life, once one person discovers a way to make money, a legion of people follow doing the same thing or a variation of it. I tried it myself and failed miserably, I will be giving it another go shortly but have my doubts, not because I fear failure… but because I’m unsure if I want to devote a month of my life on ONE platform (which I don’t own) when I have so many other things I want to do. The days of uploading a “cause” and sitting back while the money flew in are long gone. Why do these crowdfunding systems work so well? Well, people are promoting the hell out of their campaign and guess where all that traffic goes… the crowdfunding platform! Why not skip the middleman and send them to your site instead? Hmmm… then you don’t benefit from the crowdfunding platform “virality” coefficient (or potential).

If you look at Kickstarter, you’ll notice something interesting… now many people with campaigns have videos… very NICE PROFESIONAL videos. It’s like Youtube all over again, people upload crap and a few send good stuff, they get more “hits” and so it brings the bar up for everybody. This keeps going until everybody does the same thing in the hopes of getting views for being unique. I hope you are seeing a pattern here.

Buying views, fans and fake visitors

Another problem with all these third party platforms and increasingly your own land (but at least you see them there) are robot visitors – taking-up resources, watching videos etc… but that will never buy a thing. Looking at my cloudflare account for CNCKing.com, I notice something striking… half my visits to my website aren’t people but web crawlers! Even worse, they made my site go down several times because there were so many of them! I had to get a server account just for that one domain to handle traffic that will never convert and I have no choice on the matter! Like a mosquito, they just go there, don’t care if they live or die and just don’t follow robot.txt directions.

Facebook is great, they allow you to “buy” fans, Youtube lets you “buy” views and many other systems offer to do the same with accounts like Twitter etc… so, let me get this right – for social proof – you are actively promoting a third party site (rented land) to drive-up traffic by robots so that they may eventually visiting your site (owned land) and maybe buy something. The business model just doesn’t work. Like I said, we need to use these services as a compliment, not a business model and usually that means skipping the middleman and paying little attention to them in the first place.

What does this all mean? Well, the metrics you are given to help you track your “online success” are bogus, what the heck does “audience reach” mean or even “views” – there are there for one reason – to make the platform money by giving you an incentive to make whatever number you currently have to go up. People love seeing a number go up, whether it’s in their bank account or video views or fan base but at the end of the day, the only one I care about is the first, my bank account. So far, I’ve gotten by far the biggest bang for my buck ON MY OWN LAND!

Solution?

If you run a business, do NOT rely on social media to bring in sales, do NOT rely on xyz platform to bring in customers and although there are other business models like arbitrage (buy product A, advertise it for B and keep the difference), I think generally – the old way is still the best way. Sure, this blog post will hit over 10K people immediately upon publishing – but how many people will actually see it? Thanks to Google’s promotions tab, that number of eyeballs drops by 25-40% if they are using gmail… and the list goes on as to why most of them won’t see it.

Now, more then ever, you need to concentrate on your business on your land (or domain) and not funnel customers through third party sites – it just doesn’t work – I know there are exceptions, I know some people love to share on Facebook etc… just like people who retire thank to a lottery winning, but generally, find your customers, send them to your land which you own and service them there. Third party sites have their niche but always funnel them back to your place and don’t get them use to visiting or seeing you on another platform.

Korean farm in a gulley – house could have been better but what a fantastic location! I took this picture while I was living in Chuncheon, South Korea. I’m pretty sure this has since been replaced by massive apartment buildings.