Central Perk: 4 ian. 2011

marți, 4 ianuarie 2011

Mish's Global Economic Trend Analysis

Big 3 Becomes Big 7; More Competition in Cars
S&P 500 PE Ratios Well Above Mean and Median Long-Term Averages; What's Next?
Cash-Strapped States Seek Laws To Curb Labor Union Power
More Bank of America Putbacks Coming; Fraud Exposed

Big 3 Becomes Big 7; More Competition in Cars

Posted: 04 Jan 2011 08:28 PM PST

With the resurgence of GM and Ford, mistakes by Toyota, and records sales by Hyundai, car buyers have more choices than before, and they are using them. Please consider U.S. Car Business in Major Shift.

U.S. auto sales rose 11% in December, capping a year that suggests the industry is on the verge of one of the most dramatic shifts in its history.

For most of the past century, the U.S. car industry was dominated by General Motors Co., Ford Motor Co. and Chrysler Group LLC. Now, as a result of both long-term trends and the upheaval of the last two years, the Big Three are about to be replaced by a Gang of Seven as the industry's driving force.

In 2010, Hyundai Motor Co. saw its U.S. market share climb to just short of 5%. If the Korean auto maker crosses that threshold as expected this year, the U.S. market will have seven manufacturers—GM, Ford, Toyota Motor Corp., Honda Motor Co., Chrysler, Nissan Motor Co. and Hyundai—with market share of 5% or more. That's a dramatic shift from the days when the three Detroit companies dominated the market and dictated the industry's direction.

In 2008 and 2009, the Detroit Three were beaten down by massive losses and, later, bankruptcy. But in 2010, Ford and Chrysler both gained market share. GM, while its share slipped less than a percentage point, is on its way to reporting billions of dollars in profit for 2010 as its sales rise.

Meanwhile, Hyundai, which a decade ago was laughed off as a maker of cheap, small cars, said its December sales climbed 33% to 44,802. For the full year, its sales totaled 538,228, up 24%. It was the first year Hyundai's U.S. sales exceeded 500,000 vehicles.

Light Vehicle Sales By Month

The Wall Street Journal has a nice interactive chart of light vehicle sales, shown above. The spike in August 2009 is "cash for clunkers".

The big winner for December is "Other" with 322,595 out of 1,144,739, a substantial 28.2% of the market.

Other 322,595 - 28.2%
GM 224,127 - 19.5%
Ford 190,191 - 16.6%
Toyota 177,488 - 15.5%
Honda 129,616 - 11.3%
Chrysler 100,702 - 8.8%

Chrysler is long gone from the Big-Three, never to return.

The overall sales numbers look respectable until you total them up.

click on chart for sharper image

Sales are back to 1991 levels. Population adjusted, the chart would look even worse.

Nonetheless many will point to the bailout of GM by the Bush and Obama administrations as a success. Nothing could be further from the truth. It was bankruptcy that saved GM, not a bailout.

GM would have gone bankrupt sooner without government interference and would have recovered sooner as well. There was no need for government to get involved at all.

I always said GM would go bankrupt but survive, and that is what happened. It would have happened just the same without government interference.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

S&P 500 PE Ratios Well Above Mean and Median Long-Term Averages; What's Next?

Posted: 04 Jan 2011 12:30 PM PST

Here is an interesting chart of long-term S&P 500 PE ratios courtesy of multpl.com. I added the annotations in red.

click on chart for sharper image

Two Key Points

1. In spite of what most cheerleaders suggest, this is one strenuously overvalued market.

2. In spite of the crash in 2008 and early 2009, valuations never reached typical bear market trough valuations.

From the FAQ:

The figures on this site are the PE10 or Shiller PE. They are the price to average earnings from the past ten years. Because this factors in earnings from the previous ten years, it is less prone to wild swings in any one year.

To calculate P/E10:

1. Look at the yearly earning of the S&P 500 for each of the past ten years.
2. Adjust these earnings for inflation, using the CPI (ie: quote each earnings figure in 2010 dollars)
3. Average these values (ie: add them up and divide by ten), giving us e10.
4. Then take the current Price of the S&P 500 and divide by e10.

Wildly Optimistic Forward Estimates

Most PE estimates bandied about only look reasonable based on inflated current earnings and wildly optimistic forward earning estimates.

I took a look at forward earnings estimates and the so called Fed-model in The Question "Are Stocks a Screaming Buy Relative to Bonds?" Creates False Premises Here are a few key snips....

Relative Valuation Comparisons are Problematic

The question "Are stocks cheap compared to bonds?" is pretty much like asking "Are rubber bands cheap compared to oranges?"

When both stocks and bonds are unattractive, assuming one has to choose between those classes is tantamount to asking "Would you rather risk losing an arm or a leg?"

The correct answer to that last question is "Why risk either?"

False Premise

Thus, right off the bat, the initial question implies a false premise "Should one be in stocks or Bonds?" Why does it have to be either?

Relative valuation comparisons can get one in all kinds of trouble. Both asset classes may be overvalued or undervalued.

Indeed, If stocks and bonds are richly priced, perhaps one should be in gold, commodities, currencies, cash, or hedged in some fashion. There is absolutely nothing wrong with sitting on the sidelines.

Forward Earnings Estimates Persistently Optimistic For 25 Years

A a McKinsey Quarterly report Equity analysts: Still too bullish
No executive would dispute that analysts' forecasts serve as an important benchmark of the current and future health of companies. To better understand their accuracy, we undertook research nearly a decade ago that produced sobering results. Analysts, we found, were typically overoptimistic, slow to revise their forecasts to reflect new economic conditions, and prone to making increasingly inaccurate forecasts when economic growth declined.

click on chart to expand

Moreover, analysts have been persistently overoptimistic for the past 25 years, with estimates ranging from 10 to 12 percent a year,4 compared with actual earnings growth of 6 percent. Over this time frame, actual earnings growth surpassed forecasts in only two instances, both during the earnings recovery following a recession. On average, analysts' forecasts have been almost 100 percent too high.

Because forward estimates have been far too optimistic and also to eliminate huge earnings spikes, Robert Shiller and sites like multpl.com use 10-year smoothings.

Finally, I do not believe current earnings statements because banks are still hiding losses off the balance sheets, assets are still not marked-to-market, reserves are insufficient to handle upcoming losses, and because various capital-raising efforts required by Basel III have not been implemented.

On that basis, the market (and forward estimates) are both far frothier than the opening chart implies.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Cash-Strapped States Seek Laws To Curb Labor Union Power

Posted: 04 Jan 2011 09:47 AM PST

In a growing, justified wave of public-union resentment, at least 10 states seek to make major changes in labor law. Radical proposals come from newly elected governors in Wisconsin and Ohio.

I heartily endorse Strained States Turning to Laws to Curb Labor Unions

Faced with growing budget deficits and restive taxpayers, elected officials from Maine to Alabama, Ohio to Arizona, are pushing new legislation to limit the power of labor unions, particularly those representing government workers, in collective bargaining and politics.

On Wednesday, for example, New York's new Democratic governor, Andrew M. Cuomo, is expected to call for a one-year salary freeze for state workers, a move that would save $200 million to $400 million and challenge labor's traditional clout in Albany.

But in some cases — mostly in states with Republican governors and Republican statehouse majorities — officials are seeking more far-reaching, structural changes that would weaken the bargaining power and political influence of unions, including private sector ones.

For example, Republican lawmakers in Indiana, Maine, Missouri and seven other states plan to introduce legislation that would bar private sector unions from forcing workers they represent to pay dues or fees, reducing the flow of funds into union treasuries. In Ohio, the new Republican governor, following the precedent of many other states, wants to ban strikes by public school teachers.

Some new governors, most notably Scott Walker of Wisconsin, are even threatening to take away government workers' right to form unions and bargain contracts.

"We can no longer live in a society where the public employees are the haves and taxpayers who foot the bills are the have-nots," Mr. Walker, a Republican, said in a speech. "The bottom line is that we are going to look at every legal means we have to try to put that balance more on the side of taxpayers."

But it is not only Republicans who are seeking to rein in unions. In addition to Mr. Cuomo, California's new Democratic governor, Jerry Brown, is promising to review the benefits received by government workers in his state, which faces a more than $20 billion budget shortfall over the next 18 months.

"We will also have to look at our system of pensions and how to ensure that they are transparent and actuarially sound and fair — fair to the workers and fair to the taxpayers," Mr. Brown said in his inaugural speech on Monday.

Of all the new governors, John Kasich, Republican of Ohio, appears to be planning the most comprehensive assault against unions. He is proposing to take away the right of 14,000 state-financed child care and home care workers to unionize. He also wants to ban strikes by teachers, much the way some states bar strikes by the police and firefighters.

"If they want to strike, they should be fired," Mr. Kasich said in a speech. "They've got good jobs, they've got high pay, they get good benefits, a great retirement. What are they striking for?"

Mr. Kasich also wants to eliminate a requirement that the state pay union-scale wages to construction workers on public contracts, even if the contractors are nonunion. In addition, he would like to ban the use of binding arbitration to settle disputes between the state and unions representing government employees.

Union leaders particularly dread the spread of right-to-work laws, which prevail in 22 states, almost all in the South or West. Under such laws, unions and employers cannot require workers to join a union or pay any dues or fees to unions to represent them.

Unions complain that such laws allow workers in unionized workplaces to reap the benefits of collective bargaining without paying for it.

"They're throwing the kitchen sink at us," said Randi Weingarten, president of the American Federation of Teachers. "We're seeing people use the budget crisis to make every attempt to roll back workers' voices and any ability of workers to join collectively in any way whatsoever."

In Praise of Throwing the Kitchen Sink

I salute governor John Kasich of Ohio and especially Scott Walker in Wisconsin. Walker wants to eliminate the ability of unions to negotiate including decertification.

Please see Wisconsin Governor-Elect Proposes Abolishing State Employee Unions for details.

From Hardball in Wisconsin; Massive Defeat for Unions in Lame-Duck Session

Nationally, we need to kill collective bargaining for all public unions, scrap Davis-Bacon and all prevailing wage laws, mandate Right-to-Work laws, and do something to cleanup untenable public union pension promises, not just going forward, but existing benefits as well.

To do the latter, I propose taxing public union pension benefits above $120,000 at 90%, returning the excess to the pension plans until the plans are fully funded using a reasonable rate of return estimate of the long-term T-Bill rate. That rate is currently 4.25%.

Day of Reckoning Arrives

To fully appreciate the problem, please see 60 Minutes: Day of Reckoning Arrives; Chris Christie "It's Not an Income Problem, It's a Benefits Problem"; Six Common Sense Solutions

It is a statement of fact that public unions in cooperation with corrupt politicians have bankrupted numerous states and nearly every major city in the country. The worst states are those where the unions have been the most in bed with politicians: California, Illinois, New York, New Jersey. None of them are right-to-work states.

Fortunately for New Jersey, governor Chris Christie is turning thing around.

Six Common Sense Solutions

Scrap Davis-Bacon and all prevailing wage laws.
Scrap collective bargaining for public union workers entirely.
Implement national right-to-work laws.
Outsource every public sector job possible including police and fire departments to the lowest cost private sector provider.
Kill defined benefit pension plans for all new hires and for all public employees that do remain in the system.
Tax public union retiree benefits over a certain amount.

Every states should be a right-to-work state. Better yet, the goal should be complete elimination of public union in the country.

Addendum:

The question keeps coming up: "Don't we need to fix problems with executive pay and fraud at banks at the same time?"

Of course not. It would be like saying one should not organize a save the whales campaign unless there was a simultaneous effort to send a man to mars.

Boom-bust cycles are caused by the Fed and Congressional spending. The solution is elimination of the Fed.

City and state bankruptcies are caused by the unions buying votes of corrupt politicians resulting in untenable wage and benefit packages of public unions. Something needs to be done now about pension promises that cannot be met.

Attempts to address both together as one issue is not workable because the problems are not closely related. Banks and the unions would both lobbying against the bill at the same time.

Moreover, executive pay, however outrageous, does not come out of taxpayer pockets. Union benefits do.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

More Bank of America Putbacks Coming; Fraud Exposed

Posted: 04 Jan 2011 12:11 AM PST

Bank of America agreed to settle part of its claim with Fannie and Freddie for $2.8 billion. It appears to have gotten off cheap but Market Watch reports For B. of A., mortgage 'put backs' aren't over

Bank of America Corp. unveiled a $2.8 billion deal with Freddie Mac and Fannie Mae on Monday that settles legal spats over losses on hundreds of billions of dollars in home loans that the lender sold to the government-owned mortgage giants.

However, the agreement only deals with part of Bank of America's exposure to mortgage repurchase, or "put back," requests, according to analysts.

The bank said it paid Freddie Mac $1.28 billion in cash on Dec. 31 to extinguish "all outstanding and potential mortgage repurchase and make-whole claims" from alleged breaches of representations and warranties on home loans sold by Countrywide Financial to Freddie through 2008. This covers 787,000 loans with a total unpaid principal balance of $127 billion, the bank noted.

Bank of America also said Monday that it agreed to pay Fannie Mae $1.52 billion in cash. But this payment only deals with 12,045 Countrywide loans with about $2.7 billion of unpaid principal balance. It also resolves specific outstanding repurchase or make-whole claims, or extends the cure period for missing documentation-related claims, on another 5,760 Countrywide loans with roughly $1.3 billion of unpaid principal balance, the company noted.

"We have largely addressed the remaining GSE repurchase exposure for legacy Countrywide and the other Bank of America entities," Bank of America Chief Financial Officer Charles Noski said during a conference call with analysts on Monday.

However, the payments announced Monday don't eliminate future liability on loans with an unpaid principal balance of $394 billion that Bank of America entities sold to Fannie Mae, according to Chris Gamaitoni and other analysts at Compass Point Research & Trading LLC.

"I'm perplexed by the reaction," Gamaitoni said in an interview.

Bank of America's payment to Fannie Mae only resolved claims currently outstanding, he noted.

"To believe this is dealt with, you have to assume that Fannie will suffer no losses on its remaining exposure" to home loans with an unpaid principal balance of $394 billion, Gamaitoni added.

A bigger concern is potential losses from put back requests from private mortgage investors and insurers, according to Gamaitoni and other analysts.

In August, Compass Point estimated that Bank of America may lose $35 billion from put backs by insurers and private investors in mortgage-backed securities.

Deutsche Bank analyst Matt O'Connor reckons Bank of America could take another $15 billion hit from repurchase requests on so-called private label mortgage-backed securities.

Still, losses from private label mortgage put backs aren't a systemic risk for big banks, according to Bose George, analyst at Keefe, Bruyette & Woods in New York.

With private label securities, the originator must have knowledge of the fraud for the investor suit to have merit. In contrast, sales to Fannie and Freddie have a more absolute standard.

Also, private label securities investors must show that the fraud contributed to their losses — something that's difficult to do as time passes, George noted.

Raise your hand if you think Fannie will suffer no losses on $394 billion in loans and that Bank of America is not at huge risk from other lawsuits.

Courtesy of Zero Hedge here is a sampling of what Countrywide alleged in a prospectus and what was actually delivered.

Owner Occupied Fraud

Loan-To-Value Fraud

For more examples and a very good writeup, please see How Allstate Used Sampling To Confirm BofA/Countrywide Lied About Virtually Everything When Selling Mortgages

Clearly, Bank of America (Countrywide Financial) committed fraud, so the idea that investor lawsuits have no merit is preposterous. Moreover, it is a simple matter of common sense that when Bank of America exaggerated various numbers in its pools, that it "contributed to losses".

Nonetheless, private investor cases will not be decided on the merits of easily visible fraud, or on the basis of common sense, but rather on how much BofA can get tossed out of court on various legal technicalities.

Thus, it is difficult to assess the odds as to what extent Bank of America gets away with its fraudulent endeavors.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

SEOmoz Daily SEO Blog

Tracking Traffic from Google Places in Google Analytics

Posted: 04 Jan 2011 03:04 AM PST

Posted by RebeccaLehmann

This post was originally in YOUmoz, and was promoted to the main blog because it provides great value and interest to our community. The author's views are entirely his or her own and may not reflect the views of SEOmoz, Inc.

Google has gone to great lengths lately to incorporate local data wherever it can. Google Place Search rolled out in late October and services such as Google Tags and Google Boost offer increased visibility, for a price. It’s only natural that we would want to know if investing in these add-ons is actually worthwhile.

Most of us naturally would turn to Google Analytics for the answer, but what can you do when your referral URL says only that it’s from Google? That’s a rather vague answer with a lot of different possibilities. How can we narrow it down to traffic referred only from Google Places?

To better justify the time and money spent on Google Places for our clients, I set out to find an answer.

Method #1: Redirected Landing Page

My search for a reliable tracking method began with a question: How can we track Google Places without manual tagging? I wanted to avoid tagging initially since, as an agency, my company manages hundreds of profiles. Tagging all of them would be a huge multi-departmental project. Obviously I was going to look for a simpler way first. One method suggested to me was to use a nonexistent page on the website as the URL, then 301 redirect it to the index page. It wasn’t going to solve my “huge multi-departmental project” problem, but it was an interesting thought.

Pros: It would be relatively easy to set up, easier than manual tags. The resulting URL would be clean, visually speaking.

Cons: Given the nature of the new blended algorithm, I’m reluctant to 301 the primary landing page I’m presenting to Google. It could be downgraded at best, and regarded as a doorway page at worst.

Ultimately, we didn’t test this method. The risks were simply too great.

Method #2: Manual Tagging

So I tested manual tagging instead. The Google URL Builder is a terrific tool:

In the example above, I’m using the Content field to differentiate one office location from another, but this could also be done in the Campaign field. The resulting URL is then added to the Google Places profile.

Pros: Not only is the setup relatively easy, the data presentation in Google Analytics is really clean and easy to slice up. Different business locations are easily segmented out for deeper analysis of which locations are the biggest drivers.

Isn’t it beautiful? The first thing I did once I had this was to add keywords to the mix:

Oooh… ahhh…

Cons: It appears that adding a tracking URL triggers the dreaded “Pending Review” status instead of immediately going Active. Luckily, the change was approved within a week of submission when tested. Phew! I can’t guarantee such a short wait for everyone, of course, but the Google Places team does seem to be on top of things at the moment.

A second con is that tagging can only be used to track listings which you control. We often run up against Google Places profiles which were claimed by our predecessors who are no longer contactable, or which the clients claimed once upon a time but can’t find the login info for, or which are controlled by third parties who are still working with our client on other sites… you get the idea. In a perfect world, this wouldn’t be an issue. But it is, and until those others are magically relinquished to us, we can’t track them.

A third con is that it’s impossible to tell the difference between traffic which came from the Places profile versus traffic that came from the 7-pack search results. Google sometimes pulls the URL from its index, and other times pulls it from the Places profile. To see this in action for yourself, run a search for “Houston Breast Augmentation” and hover on the first result. It goes to a “naked” URL, with no tracking on it, exactly as you would expect. Now take a look at the SERPs for “best plastic surgeons in Houston” where you find the the same business:

Aha. So this isn’t going to filter out all traffic from the SERPs. And it’s kinda ugly, too.

Method #3: Capturing The Full Referring URL + Advanced Segmentation Or On-Page Filtering

Manual tagging wasn’t going to provide me with exactly what I was after, but I remembered seeing David Harry refer to a method of capturing full referring URLs. It occurred to me that Google Places listings probably have a unique element in their URL structure which I could segment out from the rest of the noise if I (a) had the full URL and (b) knew what that unique element was.

I’m not going into how to set up the full referrer capture filter. Go to Reuben Yau’s post (linked in the paragraph above) to see how it’s done.

Once that has been set up, create an advanced segment or an on-page filter to pull out the Google Places referrals.

It turns out that there are two ways a Google Places listing can render. One version uses "maps" in the URL, while the other uses "place". At least on the surface, it looks like the difference between a normal search and a mobile search. My filter looks like this:

Pros: Since the filtering works on the basis of the URL structure, profile control is unnecessary.

Cons: It took me awhile to figure out why the manual tagging method and full referrer methods were putting up different numbers, but finally I realized that the full referrer method does NOT include the 7-pack results. If you want to include 7-pack clicks, the full referrer method won’t do it for you. The data isn’t presented in such a pretty, clean way, and there’s no simple way to segment out traffic coming through different office locations. It can be done, it’s just a bit of a headache since it involves filtering for specific “cid” numbers from the URLs and knowing which insanely long number belongs to which location. The setup is a little more intense, too.

Method #4: Using Both Manual Tagging and Full Referrer Methods Together

Using both is how I got to this:

Between the two, you have almost everything you could ever want to slice and dice. I used a simple filter grab Google Places and manually tagged URLs and exclude SERPs traffic:

The filter works because it relies on the full referring URL to provide the bits to be filtered in and out. Once it’s in place, you can slice and dice your Google Places referral data to your heart’s content.

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Social Media Marketing: Facebook + Twitter Aren't Enough

Posted: 03 Jan 2011 04:05 PM PST

Posted by randfish

Facebook's had an incredible run for the last 6 years:

source

Twitter's had a remarkable 4 years under their belt:

sources: 1, 2, 3, 4

The growth of these twin networks has brought new discipline to the practice of traffic generation, branding and customer engagement on the web: social media marketing. But for those of us who participate in the practice, there are clear signs that Twitter and Facebook aren't enough.

Plenty of recent facts and figures have helped to hammer this point home:

Social media spending is estimated to be 10% of marketing budgets in 2011 (source: CMO Survey by Duke University)
StumbleUpon, despite having less than 1/10th the US users of Facebook and ~1/100th the engagement, sends more outbound traffic (source: Statcounter via The Next Web)
Quora, the social Q+A site is nearing 500,000 users and momentum is growing (source: TechCrunch + FastCompany)*
Stackexchange, a platform for Q+A sites, already exceeds 650,000 registered users (source: StackExchange)
Reddit grew 230%+ and now receives nearly 1 billion pageviews/month (source: Reddit via Mashable)
LinkedIn has likely passed 100 million users; they were at 85 million in November, adding ~1million/day (source: CNN Money)
Tumblr just entered the top 40 US Sites (source: Financial Times)

If your job includes the monitoring, management and/or promotion of a company's brand through social media, I'd strongly urge you to consider educating yourself about and participating in all the platforms that might matter to your company. The following are my personal recommendations for the average social media marketer to consider, grouped by users:

100 Million+ Users

25 Million+ Users

10 Million+ Users

Up-and-Comers

There's dozens, possibly hundreds of others sites worthy of your attention as a social marketer (and possibly helpful to those focused on social as a channel for SEO opportunity). So, please, let's be cautious about an overly narrow definition of social media marketing - your clients/managers/bottom line will thank you.

p.s. As a startup guy and technologist, I'm excited to see even more sites enter the social media playing field in 2011. Unlike search, where Google has a near-monopoly worldwide (excluding China, Russia, North Korea + the Czech Republic), social media offers a myriad of unique platforms for opportunity.

* I'm a fan of Quora, but this quote made me gag a bit: "Cheever dismisses the notion that there is a direct competitor for Quora." Hubris, I understand, but blatant disregard for the truth is unbecoming.

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Seth's Blog : In defense of RSS

[You're getting this note because you subscribed to Seth Godin's blog.]

In defense of RSS

Lots of buzz today about RSS (dying or not dying).

If you're not using it, can I strongly suggest you give it a try? I use Newsfire. Not sure the particular readers matters, though.

Here's what you need to know:

It's not particularly difficult to keep up with 200 blogs you care about in less than hour using an RSS reader.
RSS provides home delivery. Instead of remembering where to click, or waiting for a post to get all buzzy and hot, the good stuff comes to you. Automatically and free.
Subscribing to a blog is easy. Just click here for my blog, for example. In Newsfire, you can paste the URL of any blog and it automatically finds the RSS feed for you.

RSS is quiet and fast and professional and largely hype-free. Perhaps that's why it's not the flavor of the day.

• Email to a friend •

•

Michael Gray - Graywolf's SEO Blog

What Social Signals Might Search Engines Use

Posted: 04 Jan 2011 07:34 AM PST

Late last year both Google and Bing announced they are both using social signals as part of the ranking algorithm. Those of us who have been in the game a while have long suspected this, but it’s nice to see it come from the horse’s mouth, so to speak. So, as a search marketer, what signals might they be looking at and what are some ways we can leverage to our advantage?

Probably the number one place you should be involved in is Twitter. It’s extremely likely that search engines are looking at who is tweeting and retweeting links that go to your website or are about your keyword. In fact you can already see this at work in the SERP’s right now.

Google SERPs with shared by link

A tweet from an authoritative account will carry more weight than yours …

The one thing we know, however, is that Google tries to give things credit using trust and authority metrics not just sheer numbers. So a tweet from a trusted account like say CNN carries more weight than yours. A tweet from an authoritative account like Kim Kardashian will carry more weight than yours (remember trust and authority are two different things). This is a similar concept to pagerank, and I mean internal pagerank not toolbar pagerank.

As a marketer, how can you go about assessing the trust and authority of an account, since Google and Bing aren’t sharing their metrics with us? One of the best tools right now is Klout. Before we go any further I’ll clarify there is no evidence that Google is using Klout’s data or that Google’s ranking for Twitter profiles is in way similar to Klout’s. What I am saying is Klout has fairly reliable method of assessing how “important” a Twitter account is. I’d also say that it pretty unlikely that you could have an account that is doing well in Klout but is given no value in Google. For example, let’s compare my Klout Score (screen shot) with Kim Kardashian’s (screen shot).

Michael Gray Klout Score (click to enlarge)

Kim Kardashian Klout Score (click to enlarge)

Her score is higher than mine, with the most dramatic difference in the reach, amplification, and network values. Next look at how Klout classifies our accounts and who we influence and are influenced by.

The people who I interact with fall in the middle right, lower left and lower right areas. The people who she interacts with are upper left and upper right, and are probably more trusted and authoritative (this isn’t meant to make anyone look/feel bad–I am using it simply as an example to illustrate the dramatic difference between accounts) . So, if you are looking to make the most of Twitter, concentrate on building trusted authoritative accounts and interacting with trusted authoritative people.

Where are some other places that search engines might look for signals? … Facebook. Yes, I get that a lot of Facebook is behind privacy walls and that, in Google’s case, there is almost an adversarial relationship to keep Google from the data. However, if something is popular on Facebook, it’s unlikely that it will stay on Facebook. It will leak over into other social spaces, like Twitter, Stumbleupon, gmail, or at least pass through browsers with the Google toolbar. The more points of data that search engines see that tell them people are using, visiting, and sharing your website, the better.

This brings up the hobgoblin of paid/sponsored social media activity. Currently, all of the links are no followed on the outside, but the search engines are cagey about handling it if those tags are applied to the data they get straight from Twitter. Most sponsored tweets are required to have a hashtag to meet with FCC disclosure compliance, and Google has even said they consider hashtags a signal of low quality. That said, back room deals, friend networks, and non disclosed sponsored tweets do happen. Right now it’s probably small enough that the search engines don’t have to worry, but I expect this to change in the future, as engines become more sophisticated about interpreting social signals.

So what are the takeaways from this post:

Claim your names/brands/products on all the search services with a service like Knowem.
Choose the ones where your customers are and that you have the time to maintain–Twitter and Facebook are probably the best choices for most people
Strive to build up as much trust, authority, and reach as possible with your accounts
Use them to send signals to the search engines about your own quality content and to the content of people associated with you or who interact with you
If you engage in sponsored social activity, beware of algorithm changes that may devalue this tactic

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