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monopolydrunk

Source: Threadheads

Ben Thompson’s post this week on Microsoft’s Monopoly Hangover touched a nerve. Thompson’s thesis is that companies that are monopolies tend to face considerable problems once the monopoly ends. He boils these problems down to:

  • Nature
    “The great thing about a monopoly is that a company can do anything, because there is no competition; the bad thing is that when the monopoly is finished the company is still capable of doing anything at a mediocre level, but nothing at a high one because it has become fat and lazy.”
  • Business Model
    “The natural inclination for former monopolies, at least if Microsoft and IBM are any indication, is to stick with the monopoly-era business model.”
  • Culture
    “When there’s little competitive threat, when high profit margins and a commanding market position are assumed, then the economic and market forces that other companies have to live or die by simply don’t apply. In that environment, what would you expect to happen? The company and its people lose touch with external realities, because what’s happening in the marketplace is essentially irrelevant to the success of the company…”

This feels relevant because I think the SEO industry is in the early phases of a monopoly hangover. And with the speed of change in the tech industry ever-increasing, the length of each phase gets shorter.

For the past decade or so, SEO consulting as an industry has been its own odd version of a monopoly. Customers had limited knowledge of what they were buying and many didn’t even know where to buy it. Demand felt infinite.

In the early days, SEO consultants had pricing power – you could almost charge whatever you want. If a prospect balked there was likely another one in your inbox wanting to buy your service. SEO tool providers probably had similar experiences. We all were hungry for data, shortcuts and ways to automate our work (we still are).

No one of us had monopoly power of course, but demand so outstripped supply that it certainly felt like we did.

I don’t think that’s the case today:

  • It feels like most companies that even come close to touching marketing (web developers, system integrators, media buyers, domain providers, mobile site providers, business listings management services. hosting companies, etc.) offers some version of SEO consulting these days, driving pricing down across the industry. In many cases, firms that focus on paid search are throwing SEO in as “added value”.
  • Tool providers are increasingly moving from point solutions to “kitchen sink” solutions. SEMRush is a great example. They have done a truly impressive job of iterating from a keyword/rankings research tool to what feels like a full SEO suite (backlink analysis, technical analysis, etc.).

While there are still plenty of ways to differentiate your services, the overall trend feels like a lot of the industry is being commodified.

As a competitor in SEO, these forces have had me thinking about whether or not Local SEO Guide has a post-monopoly hangover (although I hadn’t thought of it that way until I read Thompson’s post). Thinking about it via Thompson’s framework:

  • Nature
    I’d like to think I never got lazy, but I certainly got fat. I took as much business as I could handle. It got to a point where I was afraid that the quality of my work, and my sanity, were going to suffer. That was about three years ago and one of the primary reasons I starting asking smart people if they would consider working with me. Over three years we have grown from two people to eight. This has dramatically changed the nature of the company, but in classic old-dog/new-tricks vein, it hasn’t quite changed my nature (I don’t think). That’s got me thinking as we try to grow in this post-SEO-monopoly world, what are the aspects of my own nature that need to change to keep this thing going in the right direction?
    • Business Model
      While SEO consulting is our core business, over the past three years we have grown a variety of related services to improve ways we can help our clients and to attract new business. Our local citation services for multi-location brands and our white-label service for other agencies have been two of our strongest growth engines. And next week we’ll be jumping into the SEO tools SAAS space (stay tuned!).
    • Culture
      This has been perhaps the most interesting challenge for us/me. I have always found this talk by Cabel Sasser of Panic Software inspiring:
      Sasser talks about how the goal of Panic is not to IPO or sell out, etc. but rather to hang a sign on the front door that they have “gone fishing” when they are ready to retire. When the LSG team talks about the mission of the company, we typically discuss helping our clients succeed at their jobs (and in some cases, save them) and creating a life for our employees that enables them to achieve their own “gone fishing” goal. We are definitely trying to be the best at what we do, but I often wonder if, given the state of the SEO world these days, that’s enough?

      Do we need to be more aggressive marketers? Do we need to try to be the smartest guys in the room, or at least make silly videos portraying us that way? Do we need to be constantly blogging about the Ultimate List of SEO Bullshit? Or can we just continue doing great work and continue to rely mostly on our reputation and hand-crafted Twitter feed for business? (#humblebrag) If I am being honest with myself, I think we do need to do the Ultimate List of SEO Bullshit and the silly videos; we just need to figure out how to do those “marketing” things in a way that reflects our culture and values. Culture can certainly be a curse – it’s the source of a both company’s strength and its weakness.

    I am not sure there are any perfect solutions to how to survive the SEO monopoly hangover, but if you’re not ready to go fishing yet, it certainly couldn’t hurt to think about it. I certainly am.


     
     

    4 Comments

    • Joel Headley  July 27, 2017 at 4:29 pm

      Isn’t this the problem describe in the Innovator’s Dilemma? I’m not sure it is unique to a monopoly, but just success.

      Reply
      • Andrew Shotland
        Andrew Shotland  July 27, 2017 at 4:50 pm

        I guess you are right Joel but “The SEO Success Hangover” is not as clickbaity…

        Reply
    • Marcin Kordowski  August 2, 2017 at 5:02 am

      From my perspective, Head of SEO we need to be more aggressive marketers and be the smartest guys in the room. If we dont we will be like a babe in the woods. Reagards,

      Reply
      • Andrew Shotland
        Andrew Shotland  August 2, 2017 at 7:24 am

        Hey Marcin, to be a bit clearer, the “smartest guys in the room” was a reference to “Enron – The Smartest Guys In The Room”. I was thinking out loud about how much we have to put on a show that implies we are SEO geniuses for marketing’s sake. I agree that it is likely a good thing to truly be the smartest guy in the room, particularly about SEO, but I have found as a consultant it’s often more important, and often a more reasonable expectation, to be merely the best listener in the room.

        Reply

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