This year, everyone’s talking about who will be the new Foursquare
or Twitter at SxSW 2010. But it will also be interesting to see who will be
this year’s big screw up. AT&T is working hard to make sure it won’t
be them again.

A strong showing at the annual tech festival in Austin Texas can do great things for business. But for those that make a bad impression at SxSW, it can take a long time to recover. And last year at the festival, AT&T let down a lot of people. The telecom giant is determined not to let the same thing happen this year, but it’s going to take a lot to win back stubborn techies.

AT&T has something that most startups at SxSW don’t: a guaranteed audience. Due to its exclusive contract with Apple to distribute the iPhone, AT&T has gotten itself access to a large audience of early tech adopters — a large percentage of whom show up every year in Austin for SxSW.

Last year, the massive number of users trying to access AT&T’s cell and data network overwhelmed capacity and led to many dropped calls and undelivered messages. It was a PR disaster for the carrier and over the subsequent year, AT&T has earned an increasingly negative reputation for bad service. Now the company is embroiled in an turf war with competitor Verizon in ongoing ad campaigns that try to denigrate each other’s service capabilities.

One of AT&T’s latest ads now has even incorporated Verizon’s map image into its critique of its competitor:

This year, the network wants to avoid getting charged with complacency. AT&T has been working to upgrade its service around the country, but especially in Austin.

According to gigaom, AT&T has outfitted the city with a new antenna system near the convention center, upgraded its spectrum, imported three mobile cell towers and added “fiber-optic connections to more than quadruple the backhaul capacity of each of the eight cell sites that serve the event area.”

Meanwhile, AT&T is getting better service reviews lately. According to PC World, AT&T’s download speed is 67% faster than its competitors. But convincing convention goers that service has improved is a big goal. So far on Twitter, people are looking forward to better service, but hesitant to trust that it will happen. A sample:

,

If AT&T can really provide reliable service in Austin, it will help to undo some of the damage of last year and prove that the changes it has been making are working. Part of the problem in 2009 involved having such a highly concentrated number of smartphone users in one location. At the time it was an outsized number that wasn’t often replicated, even in more urban areas, but as smartphone adoption increases, cell phone users are increasingly adopting the habits of early tech adopters.

SxSW attendees may be a fickle bunch, and their same media consumption habits may differ from the general populace, but if the network can appease them, it will go a long way toward changing its reputation in regards to spotty service. And accomplishing that becomes increasingly important AT&T’s exclusivity contract gets closer to running out on the iPhone.

Images: SxSW, AT&T, Twitter

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It didn’t take much consideration to drop my landline. Cable I thought about a tad longer before cutting the cord (all those years in the TV business doubtless had something to do with hanging on).  Fewer bills, reduced customer service hassles, and besides, neither my telco nor MSO delivered anything I wanted but couldn’t access digitally anyway.

It was different with The Times. It was almost atavistic, having grown up in a household with two papers delivered daily. The first thing I did when I got to college was sign up for NYT delivery. Not once has home delivery stopped in four decades (not counting getting the International Herald Tribune – then Times co-owned – during my Euro-years.

The reasons not to stop getting the Times were manifold. The brand. The content. The serendipity of finding stories outside the parameters of what 300 or so RSS feeds deliver. The personal relationship (friends who work there; having had my own byline in those hallowed pages on more than one occasion). The morning ritual. The moral obligation to do one’s part in financially underwriting traditional journalism, particularly as a journalist.

In the end, the Times fell down for me on the last mile, that longtime problem of ecommerce and information providers alike.

You see, in the 17 years I’ve lived at my current address, the Times and I have gone through three or four protracted episodes per year in which the courier leaves the papers in the building lobby rather than distributing them upstairs at our doors. Each time this happens, it results in phone time in which I patiently explain to polite and well-trained customer service reps that if I have to dress and go downstairs to retrieve an ostensibly delivered paper,  I may as well cross the street and purchase it at a lower cost from the corner newsstand.

I know this last-mile issue affects The Wall Street Journal. It’s delivered in Manhattan by the same service responsible for Times home delivery, but with a lobby-drop only policy, doubtless a holdover from the era when its readers worked in offices rather than increasingly at home. In pajamas. Anecdotally, I know dozens of people who no longer get the WSJ delivered because they aren’t willing to dress for the privilege. Why should they? It’s cheaper to access the paper online.

Print journalism has been in freefall for two decades. A tremendous, if overlooked, issue in its decline, isn’t just digital. It’s digital delivery. To retain their most profitable and valuable subscribers, print publications have to go one step beyond in every aspect of customer service. Adopt zero-tolerance rates for missed papers, botched deliveries and the like. I didn’t cancel the Times because I don’t like or don’t want the paper, or because the Web replaced it. I cancelled because of a persistent problem with getting it.

Never mind the money, although with the c. $35 per month I’m saving on Times delivery would more than pay for a Kindle with a digital subscription to the paper “auto-delivered wirelessly when the physical issue hits the newsstand,” i.e. hours before the physical paper does (or does not) land on my doorstep. It’s the experience. The tradition. Curling up with it. Yes, even occasionally clipping it.

Those days are, very sadly, over now because sure, customers will accept subpar customer service. But only when there are no alternatives.

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The road to online music streaming is littered with the bodies of startups with interesting ways of sharing music. And internet radio darling Pandora was almost one of them — multiple times. This weekend, The New York Times documented the various ways that Pandora almost went out of business over the 10 years of its existence.

Pandora is on track to earn $100 million this year. That turn around is due to a number of issues. Some of them are extenuating circumstances — like recently reduced royalty fees for streaming songs. But Pandora has also been paying attention to changes in consumer behavior and digital payment structures. Their new revenue streams — including online ads, new streaming deals and a paid streaming model — prove that there’s not always one way to bring in a dollar.

Music streaming is a sector with myriad hurdles standing in the way of profitability. Pandora started off as a music recommendation service for businesses in 2000. After the dot-com bubble burst — and funding dried up — Pandora CEO Tim Westergren shifted his focus to bring music to consumers rather than businesses. And while the company found a strong following of consumers, revenues didn’t follow. Especially after record companies demanded royalty fees for individual songs in 2007.

But Pandora enlisted its coterie of brand advocates to champion its cause. According to The Times:

“Pandora hired a lobbyist in Washington and recruited its listeners to
write to their representatives. ‘A lot of these users think they’re
customers of the cause rather than users per se,’ said Willy C. Shih, a
professor at Harvard Business School who has written a case study on
Pandora. ‘It’s a different spin on marketing.’ The board agreed to
negotiations and after two years settled on a lower rate.”

Pandora also hired Steve Cakebread from Salesforce.com as CFO to help run the business. But even after royalty fees were lowered from 0.19 per song
played to $.08 per song or 25% of revenue, Pandora needed additional money to help bear the burden of streaming costs and other overhead.

The company has been interspersing its stream of songs with advertising for a few years to help defer costs. But also, in 2008, they launched an iPhone app to stream music in mobile. From the Times: “Almost immediately, 35,000 new users a day joined Pandora from their
cellphones, doubling the number of daily signups.”

Meanwhile, Pandora is asking heavy users to pony up for the music they love to stream. Free users are allowed 40 hours of free listening per month. For music over the limit, it costs 99 cents to listen for the rest of the month. If users know they’re heavy listeners, they can forgo ads altogether and listen to unlimited streams for $36 a year.

This freemium model has worked well for Pandora, in part because they have closely tied every payment decision to the fees and charges that Pandora is required to pay. Users who came out to defend the service when the labels wanted to gouge online streaming are now aware that the music they want to get for free isn’t free to deliver.

And Pandora isn’t just depending on direct payment and ads delivered to consumers to increase its bottom line. The company has also hired George Lynch, an executive from Sirius XM Satellite Radio, to help win new listeners this year through streaming Pandora into multiple new vehicles by the end of the year.

While the terrain of streaming music may shift in unfavorable ways yet again, Pandora has done an excellent job of communicating its difficulties to consumers without forcing them to bear the brunt of the burden for those fees. Consumers can still access the company’s great music genome to discover music, but if they really value the service, they have to pay for it. Or put up with small inconveniences that help bring in revenue through alternate means. Meanwhile, the company is working to partner with other brands to deliver music in new ways and come up with other means to share its music now that it’s become clear that unlimited free sharing couldn’t last forever.

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Here are five SEO mistakes e-commerce sites make, so that you
don’t have to make them…

Avoiding the ‘copy and paste’ trap

1. Using identical vendor descriptions.

Most e-commerce sites will get a
product description from the vendor and copy paste it word for word.
Superficially, this looks OK because each product page has a full
product description which includes key features, overview etc, but it
isn’t that easy.

There is a fair chance that other e-commerce sites
have used the identical vendor description
which makes your content a type of duplication. You should make your
content unique and valuable by adding your own notes under an editor
review or by encouraging customer reviews.

2. Duplicating that unique and valuable description.

Many e-commerce sites will copy paste their new unique content onto 3rd party sites
like eBay, Amazon and co’ thereby creating a type of content
duplication. Sure, the description first appeared on your site and the
search engines should recognize this, but why take the risk.

The
engines do get things wrong and the last thing you’d want is to compete
on the SEO front with more sites. Remember that identical vendor
description from before? Well, here you can use it freely.

Creating unwanted competition

3. Not paying attention to the affiliate channel.

E-commerce sites often
profit from a good affiliate programme and for many of my clients, this
channel has the lowest CPA which makes me a huge fan! Nevertheless,
it’s important to set terms and communicate them to your affiliates as
to what they can and cannot do. It is also important to take into
account your weaknesses
when recruiting new affiliates.

For example, if the search engine
results for your brand terms are weak and you have recruited many
promotional code affiliates, don’t be too surprised if within a short
space of time you’ve created unwanted competition for yourself on the
organic front. You might be paying for sales, which would have
otherwise come directly to you.

4. Revealing way too much.

There is always a fine line between revealing
too much information and finding ways to convert more users by sharing
internal stats. e-commerce sites will often reveal best sellers lists
to try and generate more sales, and while this is all well and good,
there’s a fine line here. Some e-commerce sites will even go a step
further and will list best sellers on a category level together with
revealing the product availability (XY in stock).

When doing
competitive analysis, eagle eyed people might pick up on that and will
very quickly estimate the number of products you sell. If the
conditions are right, you might encourage others to complete against
you as they can tell how many you sell.

Fixing what’s not broken

5.
Making site wide changes.

For established e-commerce sites in
particular, making site wide changes over night can easily backfire.
It’s common for site owners to pick up on the latest SEO trends and
implement them across the site although it isn’t clear what they are
trying to fix. From time to time we come across misuse of the
robots.txt which wrongly blocks important parts of the site and lately
misuse of the rel=canonical tag is becoming a real issue. The trick is
to identify the area you’re looking to improve, measure the outcome on
a group of pages and only then implement it site wide.

Have you come across any common sense mistakes recently?

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Last night, the company, which now has a market cap just shy of $200bn,
aired its first television ad for the iPad on the 82nd Annual Academy
Awards. The 30-second spot provides a visual (and musical) depiction of
the iPad and its capabilities, and concludes with the words “April 3”
and “iPad“.

With that April 3 date now less than a month away, the question is: will the iPad be a ‘blockbuster‘ or a ‘box office failure‘? Given Apple’s track record, it wouldn’t be surprising if the iPad turns out to be the tablet computing equivalent of the film Avatar, which has grossed well over $1.5bn globally.

But what if the iPad doesn’t sell? There are a few good reasons to believe that Apple has its toughest challenge yet in convincing consumers to say “iPaid for the iPad“:

• From 3G pricing and Flash support to accessories and the lack of a camera, there are a number of unanswered questions surrounding the iPad. These questions could conceivably give consumers pause, which would of course hinder sales in the process.

• A recent survey by AdMob found that only one in six iPhone users currently plan to purchase the iPad. While that still represents millions of potential iPad buyers, it’s hardly the most encouraging figure. AdMob’s survey only had 960 participants and AdMob is owned by Apple rival Google, so I wouldn’t read too much into the survey. But if it’s anywhere near accurate, it would support the numerous iPad critics who have voiced concern about the challenges Apple will face in trying to create interest in an entirely new category of mobile device.

Again, Apple’s track record is such that it’s hard to write off Steve Jobs and crew. But if theory becomes reality and the iPad gets off to a slow start, it would be an interesting test for a company that is so used to ‘getting it right‘ (or close to it) on the first try in recent years. Would Apple be able to reset expectations and adjust the iPad’s positioning? Would it listen to iPad critics who have complained about, say, the lack of a camera and Flash support? Or would Apple respond with hubris and arrogance?

Great companies are defined not only by their successes, but by how they address shortcomings and failures. We know that Apple is capable of producing great products but I for one wouldn’t mind seeing what it does with one that needs a bit of work. We’ll soon find out if the iPad is that product.

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Ken Fisher, the founder and editor-in-chief of popular online tech
publisher Ars Technica has a message to readers who use ad blockers:
you’re killing us.

In an effort to defeat ad blockers, last Friday Ars experimented with a technique
designed to prevent Ars readers with ad blockers from viewing Ars
content. According to Fisher, the experiment was a success
“technologically” but not surprisingly, a “mixed bag” socially.

As you might expect, some Ars readers running ad blockers who found themselves cut off were upset with Ars’ experiment. Many were not upset by the experiment itself, but by the way it was implemented. But according to Fisher, the experiment was justified:

There is an oft-stated misconception that if a user never clicks on ads, then blocking them won’t hurt a site financially. This is wrong. Most sites, at least sites the size of ours, are paid on a per view basis. If you have an ad blocker running, and you load 10 pages on the site, you consume resources from us (bandwidth being only one of them), but provide us with no revenue. Because we are a technology site, we have a very large base of ad blockers. Imagine running a restaurant where 40% of the people who came and ate didn’t pay. In a way, that’s what ad blocking is doing to us. Just like a restaurant, we have to pay to staff, we have to pay for resources, and we have to pay when people consume those resources. The difference, of course, is that our visitors don’t pay us directly but indirectly by viewing advertising.

Sound familiar? It should. It’s similar to complaints of record labels, who have equated downloading an album gratis from a peer-to-peer file sharing service as the moral equivalent of walking into a store and stealing a CD. Of course, there are those who argue that such analogies are accurate, but even if we assume for argument’s sake that they’re right, being right doesn’t always pay the bills. And like it or not, every business has to pay the bills.

While I’m personally a fan of Ars’ content and can sympathize with Fisher’s frustration, I’d argue that the ad blocker problem isn’t devastating, but rather potentially helpful. If enough Ars readers are so turned off by ads that they’re blocking them and this is impacting Ars’ bottom line, Ars should take this as a hint that it needs to reevaluate its business model. Obviously, readers who use ad blockers would otherwise be generating lots of ‘wasted impressions‘ for Ars’ advertisers. Wasted impressions I’d hope Fisher would agree reasonably represent a loss (of sorts) to the advertisers Ars is supposed to be helping. Using Fisher’s restaurant analogy, one could argue that the advertiser is footing the bill for dinner and Fisher is trying to find a way to get the advertiser to pay for 10 meals when only six individuals are really eating.

Instead of pleading with readers to turn off ad blockers so that Ars can get paid for impressions Fisher knows aren’t likely to deliver results for Ars advertisers, wouldn’t it make more sense for Fisher to develop a business model that lets Ars monetize these readers in a fashion that’s good for all interested parties? Perhaps Ars should be pushing its subscription offering harder. Already, Ars is apparently evaluating offering a monthly billing option for its subscription, something which it surprisingly doesn’t offer now but that would probably lead to much higher conversions for obvious reasons. For those who don’t want to purchase a full subscription, why not create a cheaper subscription that provides for an ad-free experience and nothing else? If Ars is convinced that subscriptions alone can’t drive enough revenue to maintain the organization as it currently exists, there’s nothing stopping Ars from experimenting with new ways to integrate advertiser branding into the user experience in a manner that’s more acceptable to readers, and thus more effective for advertisers.

Ars’ ‘nuclear option‘, of course, is to block ad-blocking readers. It may be an unpopular move, and Ars would probably lose some readers, but it may not turn out to be all that bad. Successful businesses hawk their wares profitably, and therefore many businesses consciouslly refuse to serve potential customers that they know can’t be served profitably. Would there really be a problem with Ars refusing to serve readers who refuse to either view ads or buy a subscription?

If there’s anything we’ve learned from traditional media companies, it’s this: pleading with consumers is rarely a long-term solution to a significant business problem. From newspapers to record labels, you can’t force customers to pay you. They have to want to do it, and that usually only happens when you have the right business model. At some point, all businesses, be they traditional or digital, have to make tough decisions about their business models. These decisions aren’t always ideal, but we don’t live in an ideal world. The best business model for any business isn’t the ideal one; it’s the one that maximizes profit. It has been suggested that record labels, for instance, would maximize their profit if they lower the price of their digital music, but many refuse to consider this because they’re more concerned about metrics that are irrelevant to profit.

But businesses shouldn’t forget that profit is especially important because it’s a signal of how efficiently and effectively products are being developed and distributed. If online publishers like Ars forget this, they’ll be falling victim to the same backward thinking that has devastated so many traditional media companies.

Photo credit: hoyasmeg via Flickr.

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Long-tail keywords are phrases that are not often searched for individually, but in aggregate can create a sizeable opportunity. And with increased user sophistication and complexity of queries, the opportunity grows larger.

According to an Experian Hitwise US report (October 2009), about 60% of searches consisted of only one to three words. What is more intriguing though, is the increasing proportion of longer searches, constructed by five or more words.

Another eye-opening statistic is from Google, stating that 20-25% of all searches are brand new, ergo having never before been searched for.

Simplistically, there are two approaches to long-tail paid search: source thousands of relevant keywords in an effort to capture them all as exact matches, or rely on the broad and phrase matches to trigger the tail searches. The optimal solution is rarely one or the other, but a mix of tactics. The perfect sauce depends on available tools and processes.

Keyword length and unique queries

To find out what number of search phrases have resulted in a click, simply pull a summary “search query” report from Google, or similar report that shows actual search queries, de-duplicate and count the number of rows.

A recent campaign analysis in the software sector revealed that the total 1000 clicks resulted from over 750 unique search queries, and no keyword clicked more than twice; a proper long-tail that drove volume traffic.

For analysing the keyword length, Excel is often the tool of choice. The following function will count the number of words (assuming the query is in column A with headers) by using the empty spaces to separate words, while removing leading and trailing spaces:

LEN(TRIM(A2))-LEN(SUBSTITUTE(A2,” “,”"))+Rows(A2)

A good visual representation of how the long-tail works is a line chart plotting the keyword length and the number of impressions. These will typically have an inverted relationship.

So what do these two pieces of statistics actually tell you?

Not much in isolation. However, they are all useful in conjunction with analysing the quality of search phrases, comparing the patterns with similar campaigns for benchmarking and ultimately understanding how well the current campaign structure is corresponding to actual user behaviour.

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Ebert is the most widely read film critic in the world. And he has parlayed that audience into a vibrant community online at RogerEbert.com. But he doesn’t make much money from that effort. Now, rather than charge viewers to get access his reviews and other content, he’s going with a model that many online businesses are testing out: freemium content.

Viewers that pay a small yearly fee to access The Ebert Club will
get additional news and information from the man himself, as well as better curated access to all things Ebert. For the low annual fee of $4.99 (until the end of March, $5.00 after April 1), members of The Ebert Club will get few additional perks. They’ll have access to Ebert’s free web content — including his archive of reviews — but also special writings and postings from Ebert that are not free, links to interesting things that Ebert and his fans find on the web, and advanced tickets to Ebertfest. Also, club members will receive less information from his Twitter feed @ebertchicago, “winnowed to improve the signal to noise ratio.” As Twitter followers of Ebert know, the man tweets. A lot. Getting less content here will actually be a bonus.

While Ebert’s monetization plans may not apply to larger media endeavors, his methodology is interesting. For one, he threw out the idea of micropayments. He writes:

“I remember with what glee Gene Siskel and I once pondered [Nicholas Negroponte's 1995 book Being Digital] with its speculation on whether users would pay two cents to read
two of our reviews. Negroponte actually used us as an example. Gene and
I pounded on the office calculator: 250 reviews, times two cents, times
10,000 users, or 50,000 users, or three million users…wow! If three
million people paid two cents for our reviews, there’d be $15 million
for us to split! But, hey, even if 5,000 users paid two cents for half
our reviews, we’d gross $12,500.”

Ebert is not ready to give up access to his worldwide readership that would happen if he puts that content behind a pay wall, however. As he says: “there are lots of other excellent critics on
the web, and everybody knows it.”

But Ebert says that he will pay for some things online — like the New York Times subscription that will be implemented online next year. And like The Times, Ebert has a coterie of loyal followers who feel they gain information from his content that cannot be found elsewhere. Many Times readers said before the pay wall announcement that they would be willing to essentially pay a donation to help sustain quality writing at The Times.

In a way, that is what Ebert is doing here. As The Ebert Club progresses, he will likely find more premium content to add to The Ebert Club. But for now, he is generally charging for simplified information and more complete access to his content.

Many of his fans will use The Ebert Club as a way to show appreciation for his work over the years. Like this one named Muga, who writes: 

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There might be a recession going on, but this past holiday season, many online retailers saw record sales. One of those companies was eBags.

Over the past 10 years, eBags has grown to be the largest seller of luggage and bags online. With 500 brands and over 40,000 products available on its website, eBags set huge sales records this holiday season. Between Black Friday and Christmas, sales were up 32% over last year. Meanwhile, growth is continuing. February sales were up 20% from the same time last year.

I caught up with eBags cofounder Peter Cobb to chat about what eBags is doing to keep the growth continuing, why free shipping isn’t so important online and the benefits of not having a warehouse.

Pure play online retail performed really well this holiday season. Can multichannel retailers catch up on the web?
Brick and mortar in our category is really struggling right now. Especially when you’ve got 200 products and you’ve got a competitor with 40,000. I think in a lot of categories, online is just such a better business model. We are so bullish on what’s happening in the online retail world.

Our model is a drop ship model. We don’t have a warehouse with 40,000 bags in it. We go to our brands and ask, what do you have on your website? We key in the information and feature it on our website. When brands sign up we tell them we don’t ask much, but we need you to ship same day. This drop ship model is the reason we’re alive. We don’t have to spend tens of millions buying products and putting them in a warehouse.

How much can e-commerce sales increases be attributed to a general online consumer shift?
I do think there’s a general move toward online retail. This last holiday was one of the biggest shifts in people moving from brick and mortar to online. I heard that from multichannel retailers. This was the year people realized online is a more efficient way to shop (depending on the product). Multichannel retailers were hurt by a lack of inventory, and that pushed people online. Also, every year we’re pushing how late into the season we can ship product. This year, it was all the way up to the 19th or 20th of December. In the past we just didn’t want to risk it. That’s all played into better efficiencies and more confidence from consumers. There are also more people that use the internet for research.

What have you changed at eBags in the past year?
From a marketing standpoint, we’ve gotten better. With our email platform, we’ve gone from a shotgun approach to 1 million email members to emails that have as many of 15 different segments in an email campaign. We have also instituted personalized emails. Based on what you’ve clicked on, you’ll see products complementary to what you’ve purchased or clicked on at eBags.com. We’ve all gotten much smarter at using technology and making a better shopping experience.

How do you organize your massive offering of products?
From a navigational standpoint it’s challenging when you have 15,000 ladies handbags. No one wants to wade through 15,000 handbags. Navigation taxonomy is really critical. It’s also challenging on the marketing side. How do you create awareness for the products from a brand level? Some people shop from brand, some from product type, some at the price level.

How important are special deals online, like free shipping?
I don’t think free shipping is essential, or a requirement. I think it’s one of the marketing tools that companies can use. I think there are some consumers that gravitate toward free shipping, but we’ve done tests where we’ve offered percent off and where we’ve done free shipping. We get more results from offering a percentage off. I think it boils down to value and a fair price.

Early on, we realized what was going on with luxury sale sites — Gilt, Groupon, etc. We realized you could sell upper end items, it just has to be a great value. We went to our upper end vendors and told them we’d want really great deals. This year, we convinced many vendors to move sales forward to Black Friday. We ran the sales from Black Friday to Christmas and many of the bigger brands participated. It was a huge win for the customers. We specifically went to brands and said, give us 10 unbelievable products at fantastic prices. We featured those on our site, comparison shopping sites, etc. We used email, Twitter, Facebook and viral marketing to show that we had a great item on sale. All of those things add up.

What has changed in online retail since last year?
A lot of us have gotten smarter on key words. We’re monitoring those closely. We’ve also had fantastic partnerships. This holiday we launched with eBay. We realized they were committed to travel goods and handbags. We worked with ChannelAdviser to add a an eBay store to eBags. Those customers want great value, and our products are on Buy It Now. That launched in November. We were amazed at how the eBay shoppers took to it. It ramped up during the holdays, but it’s stayed high in the new year. Part of why it’s been successful is because  eBay has a bit of an issue with people buying products and not knowing whether they’re legit or new. eBay has realized that there are some people who want the security of buying through a known entity but still want to use eBay and PayPal. Our feeling at eBags is that a lot of people go to eBags.com, but some people like using PayPal. Or shop via Amazon. eBags products are also featured on Amazon. Some want to use comparsion shopping engines. We’re agnostic on where we are.

How important are comparison shopping engines?
We play in that arena for those customers who value price highest. We want to be price competitive. We see our eBags products in comparison shopping engines, but none of the things I’ve talked about are 20% or more of our marketing mix. It’s really a nice balance. People don’t just shop one specific way. Some people like using Nextag or Bing or Shopzilla. Others go straight to Google. Others start at eBay.

How do you break out your marketing mix?
We break it up by marketing channel. We have people for every different channel. We divvy it all up. We have partners, like ChannelAdvisor that help us with the technology. Our 400,000 products are fed into ChannelAdvisor, they repackage that and feed it in to our marketing partners. Each of them has different flavors of how they like to receive information. It’s been pretty cumbersome. But now it’s not something where our IT people have to drop everything.

What’s coming next for eBags?
There are a couple of things we’re doing site-wide. One of the things that’s nice about technology today is that most people are on broadband. That gives us the opportunity to add bells and whistles that we couldn’t do 5-10 years ago. We’re ramping up video. We have interviews with designers and brand videos. That’s something we’re really excited about, that you couldn’t even have done three years ago. We’re also doing some things to make photographs larger. With broadband you can do that and it doesn’t slow down the site.

A big area for us is behavioral targeting. If you came to the site and clicked on designer handbags, next time we’re going to show you more of them. And show what others like you have purchased, rather than make you start form the very beginning.

We were just laughing about how we ever got a sale when there was dial up. It took 10 seconds to load each image. We don’t have those issues now. You can whip through websites pretty easily.

Image: eBags

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But is this really such a good thing? There’s a strong argument to be made that companies engaging in the type of calculated strategy required to win a game of chess actually risk doing very foolish things.

A good example of this comes in the form of Apple, which has launched a questionable lawsuit that clearly targets Google. A growing number of observers are starting to wonder if the company is becoming “preoccupied with zero-sum maneuvering versus hated rivals“. Indeed, it’s clear that Apple CEO Steve Jobs isn’t the biggest fan of Google, and some believe that the lawsuit is “nothing more than a manifestation of Jobs’s own sense of injustice“.

But is Apple’s patent lawsuit proxy war against Google really such a smart move? Apple may arguably be the world’s top mobile device company, but it recently announced a tablet device that left many disappointed. Which begs the question: when did Apple decide that its resources were better spent on litigation than innovation?

Apple isn’t alone. Google has lobbied against the competition, and its recent threat to pull out of China was clearly a business maneuver designed to change the game in China, one of the few countries it doesn’t dominate in search. Yet while Google has been focused on playing chess with competitors such as Apple and Microsoft, and with entire nations like China, it completely blew the launch of a major social networking initiative that it was clearly hoping would help keep it relevant in the social networking space as Facebook continues its rise. For its part, Microsoft is now engaged in an open effort to see that the same antitrust regulations it suffered from are used against its chief online rival, Google. Yet despite Microsoft’s gains with Bing, it’s unclear whether this effort will actually help Bing, or simply hurt Google.

So what’s the problem here? While three of the world’s most successful technology companies have been busy playing chess with each other, they have been ignoring customers. Perhaps correlation isn’t causation, but I think it’s obvious: customers usually benefit very little from the chess games companies play. Certainly, Apple’s resources are far better spent on product development than a ridiculous patent lawsuit. A little bit more focus on the basics instead of world domination would probably keep Google from tripping on its shoelaces. And Microsoft’s desire to do Google in will require greater innovation, not just a little help from antitrust regulators.

Obviously, nobody is going to argue that companies shouldn’t pay attention to the competition and seize opportunities to gain advantages over the competition, but companies should also be strategic about their strategies. Companies can be too smart for their own good, and it usually starts when “zero-sum maneuvering” becomes more important than the customer.

There are six questions corporate leadership should ask when developing strategy:

• Are we acting logically?
• Is this the most effective use of our resources?
• Can this have a positive impact on our reputation?
• Does this grow the market, or create new markets?
• Are we creating value?
• Will this benefit our customers?

If a company’s leadership can’t answer ‘yes‘ to all six of these questions, particularly the last two, leadership may want to consider that it’s being too smart for its own good. And that’s never a wise thing, as customers are increasingly learning the hard way.

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