SEO As A Barrier To Entry

by on March 8, 2012 | posted in SEO Theory

In traditional business, barrier to entry is a real and entrenched idea – its proliferation in physical retail and elsewhere is a main reason why moving from poor to rich has been extremely difficult in the past – there were strong barriers to entry that required long, tiring processes of establishing supply chain efficiencies and a necessitated time-lapse of building a mass of brick-and-mortar establishments to the point of true profitability.  As the walls of retail and brick and mortar began to fall with the rise of the internet’s connected data came the rise of the new rich – those who took advantage of a new, almost evaporated barrier to begin entering complex, previously hyper-competitive markets in the physical world.

Anyone that could connect as an affiliate and throw up a half-assed web design could compete in the SEO space, whether or not they truly deserved to belong there. In the early stages of the ‘net thin affiliates blanked out competitive niches, earning millions for some forward-thinking entrepreneurs and leaving the physical monopolies to whither against the slow-moving engines they’re based on.

As time passed and the algorithms improved, many of these thin affiliates were either cut out or left to wither due to a lack of efficiencies – either the inability to compete with higher marketing budgets because of thin margins or otherwise, a substandard process that meant shoddy CRO or substandard profit per converted visitor based on a lazy or inefficient business development process.

Furthermore, many profitable keyword niches began getting thinned out, the exact match domains that power easier rankings continually being grabbed up by domainers or businesses as a protection mechanism, and through an increased SEO demand and awareness, an increased cost on a per domain basis.

These contingencies mean that an increasing number of sophisticated affiliates and SEOs decide to abandon market entry, deciding against based on A) a lack of a affordable or obtainable exact match domain (EMD) to acquire B) an algorithm that essentially prohibits their entry or most importantly – for the purposes of this blog post, anyways, C) — the continued daily increase in the pure SEO authority required to compete in a niche.

Link Building as a Barrier to Entry

Despite the internet making it infinitely easier to “take on” sophisticated businesses, time and clearly established market conditions have made it more obvious  – at least to the smart affiliates who can judge the ability to compete in a space – that it is increasingly difficult to enter and compete in a sustainable fashion.

Most SEOs can enter a keyword, with or without a device such as SEOmoz’s keyword difficulty tool – and immediately “eye” the ability to compete in that space. To each SEO, what predicts a “very competitive” space can differ based on their taste and aptitude. These conditions contain but are not limited to –

  • Exact match domains holding top keyword positions
  • Established and recognizable brands with multiple SERP positions
  • High page authority URLs dominating many ranking slots
  • Top rankings held by .gov’s or other seemingly overwhelming competitors
  • Highly optimized pages dominating most if not all ranking positions
  • Backlink profiles containing a plethora of seemingly “unobtainable” links, such as high profile news sites (CNN, Forbes, etc), education sources (.edu’s), and other governmental resources (.gov’s)
  • Local results reducing national or non-geo specific pages to a minor few

For affiliates or companies in the lead generation space (like ours), competitive research is a necessity and many of these “eye tests” can either start or stop something that will be a lifetime endeavor for our business – that is, pursuing and maintaining rankings that drive return on investment.

This reality means that it behooves current players in the space to erect as many “barriers to entry” to stop potential competitors from entering these verticals, and not just hold a number one ranking (or set of rankings) that can be fleeting on a long enough timeline.

PPC as an idea is a short sighted concept – drive immediate traffic and measure ROI. SEO, furthermore, is long term, but it is not fervently constructed based on economic principles. Rank number one, shift focus. SEO, when based upon these “barrier to entry” fundamentals, allows for rankings that not only hit number one, but also maintain dominant ranking positions for 10 to 20 years at a time.

Fighting for Market Oligopolies 

There is no guaranteed way to prevent competitors from entering the space. However, there are conditions that enable forward-thinking SEOs to pre-condition their space to prevent a hyper-competitive market environment.

1. Purchasing exact match domains as a defense mechanism – Many “brands” undergo the practice of pursuing and grabbing attractive exact match domains as defense mechanisms for their rankings. This can be an expensive practice, but when it prevents any real market advantages for a competitor, it basically can entrench rankings for the long term, and make any approaching competitors easy to see and adjust to as they approach a level where they must be paid attention to. It also offers one of the most obvious and powerful methods of entry prevention in a vertical, as many companies will not enter with sufficient firepower (EMDs) with which to compete.

2. Superior affiliate programs allowing forsight into approaching competing domains – In the lead generation space, it is typical for a business to latch on to the best affiliate plan to immediately monetize their program before using business development to fund superior margins and proprietary technologies. By establishing an affiliate program that is the number one in the space, we establish “iceberg watch” where a competing domain’s approach, lead volume and etc can be easily monitored and/or adjusted for if appropriate. On the same wavelength, if you are operating as the only affiliate program in the space, completely cutting off a long-term competitor if they may soon cannibalize existing profits (or eventually find secondary monetization opportunities) may indeed be a desired solution.

3. Inflating vertical competitiveness – Many keywords may only require 40-50 raw domain authority (DA) to compete  and/or win, but given the ability to create a falsified and/or unnecessary barrier, it may be worthwhile to strongly pursue long tail rankings where they were previously breakeven and or small margin losers in terms of required investment. By moving up secondary keywords and inflating domain metrics in the process, one can create erudite anti-competitive measures that may scare vertical prospectors away.

4. Using game theory in backlink profiles – It seems that in many verticals that it takes “a type of link” to compete. Many shares, likes, links – the reality is this is probably not always the case, and much of this preconditioning comes from game theory and also a “groupthink” type efficiency, where the market will take on the link building focus of other players in the vertical, creating asynchronous link building profiles in style and aptitude. This reality is part of the reason why most verticals lack “black sheep”, most if not all are either blacker than black in style or similarly, share efficiencies in terms of “what flies”. This applies to game theory in the group thought that establishes the commonality, “If I have a black-hat link profile and my competitor has a black-hat link profile, we can only all go down in flames, so likely none of us will”.

Sometimes spending an unnecessary amount of time creating and “boosting” high domain authority links to “cover up” what may be a lower quality underbelly to create a false identity in the eyes of competitors may be worth doing if it creates a false concept of the true “cleanness” of our profiles. This is why I have previously discussed the concept of building great content so you can buy paid links – it is this idea of a “strong link PR team” that can scare potential competitors and possibly even a manually reviewing engineer, who may not sift through the sparkling, powerful 10% to reveal the porous 90% beneath it.

5. Controlling SERPs with multiple domains and/or stacked results – Sometimes there are strong efficiencies to be had from “whitelabeled” domains that share focus but do not represent one another in terms of brand. These can allow businesses to monopolize a keyword and also gather additional useful data about search intent (those who browse through multiple listings).

There is also the idea of competitive filtering that is most cogent – if a single business can control the top two or three positions for a high value keyword, it is possible that much of the investment spent to move a domain up to that fourth or fifth spot can begin to dry.

This erosion means that eventually a business or effort can go bankrupt and/or give up and simply stop link building. This is an ideal market condition that must be fought for, and exists synergistically with the other “barrier to entry” concepts established previously. Although not nearly as good as never allowing competition at all, a great secondary event occurs when a dominant SEO effort can cause a competitor to “settle” for a third or fourth ranking. This can come from lack of movement and unsatisfactory profits that frequently comes from a long, drawn out effort to establish rankings and offset the number one or two slots – because, as we know, most of the profit comes at the top.

Using SEO Market Conditions To Our Advantage

One of our strengths as SEOs is not purely knowing SEO – but it is also knowing how the industry works. There are thousands upon thousands of websites – but not nearly as many have in-house SEOs or dedicated resources attached to them. Because of this, many sites will leverage agencies or individual consultants to do their link building for them. Through that process, a good many will stagnant or lose traction, causing businesses to get frustrated that were expecting ROI from their efforts. Some assume or see “snake oil” from our services, or otherwise, see that we simply weren’t good enough to justify continued investment.

The reality is that this is rarely an SEO service agency purely selling “snake oil” – very few SEOs benefit from not getting a businesses’ return service. Often times, it is simply possible that the SEO provider misunderstood market conditions, or are otherwise  incapable of understanding what it takes to move the needle and drive results for their clients. Also, it is possible they are operating in a vertical where every player is link building at once – meaning that the “climb uphill” is much harder, and results more difficult to come by. Because of this, it is a certainty that the decision maker buying your services will eventually erode into a “stop-start” mode – that is, they will give up on link building for a short period to pursue other consultants or otherwise, hire an SEO in house. It is this non-active period that creates the most value for our businesses and clients.

This means that theoretically, it is in our best interest not to just to hold our SEO positions, but also hold positions “across the bow” – and also constantly build on them to prevent any land capture to allow for more resources to pour in. It is our goal as SEOs to eliminate “low hanging fruit” and any real market traction, for it is this traction that creates business confidence and allows additional budget to flow in. As more budget flows in, more money is lost for us, even if we never lose rankings. After all, “profit” is revenue minus cost, and if we must inflate cost through sustained link building to maintain revenue, profit falters.

Our aim is to not to win number one rankings and the lion’s share of the profits. Our aim is stop racing with competitors – so the previous condition may persist for the longest time possible.

Beyond Number One Rankings

Given the thesis of this post, it stands then that the ideal scenario to build and multiply our SEO return over time derives from this flowchart, where the ideal market condition lies at the bottom.

Rank #1 for the majority/if not all market keywords 

———->

Rank #1 for top KWs & stop competitive pursuit of #1 ranking

———->

 Rank #1 for top KWs, stop competitive pursuit of #1 rankings & slow entry into the market 

———->

Rank #1 for top KWs, stop competitive pursuit of #1 rankings & stop entry into the market

We can never do this in totality – it is a certainty that powerful, deep pocketed businesses and also foolish vertical evaluators will enter despite our efforts. Also, Google has created an environment where true market monopolies for searchable products is nearly impossible. But by heavily investing in eroding positive market positions for our competitors, we allow our healthy, wildly profitable positions at the top to sustain itself for the longest time possible – so we can instead focus our efforts on more attractive endeavors.

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