Central Perk: 18 feb. 2014

marți, 18 februarie 2014

Mish's Global Economic Trend Analysis

Is Chicago Mayor Rahm Emanuel a Friend of Taxpayers or Businesses? Or is Chicago Like France?
Have an E Series Savings Bond? If So, It's No Longer Paying Interest; $16 Billion in Bonds No Longer Pay Interest
Hollande Promises Tax Harmonization in Six Years if Foreign Businesses Invest in France Now
US Household Debt Climbs by Most Since 2007, Mortgage Debt Leads the Way; Annually Student Debt and Autos Lead the Way
China Fooled the World (But It Cannot Last)

Is Chicago Mayor Rahm Emanuel a Friend of Taxpayers or Businesses? Or is Chicago Like France?

Posted: 18 Feb 2014 07:13 PM PST

Inquiring minds just may be wondering "Is Chicago Mayor Rahm Emanuel a Friend of Taxpayers or Businesses?"

In case you are wondering, please consider what Illinois Policy Institute writer Jacob Huebert says via email.

Chicago Mayor Rahm Emanuel recently proposed an ordinance that would regulate popular ride-sharing services such as Uber and Lyft in Chicago.

Emanuel often claims that he wants Chicago to be friendly to new businesses, innovation and technology. Unfortunately, his proposal is anything but friendly to these "transportation network" services, and would force them to either severely change the way they operate or leave the city entirely.

Where other cities have changed their laws to accommodate these new services, Chicago appears determined to continue using the law to protect established taxi companies from competition at everyone else's expense.

Here are seven of the proposal's worst anticompetitive features.

1. Ride-share companies can't own vehicles – or help drivers buy them

One provision of the ordinance says that the operator of a ride-share service cannot "own, provide financing for the obtaining, leasing, or ownership of, or have a beneficial interest in transportation network vehicles."

As it stands, neither Uber nor Lyft actually owns any cars or employs any drivers – they just bring drivers and passengers together. But who's to say some future entrepreneur won't find a way to make it economical for the "network" to also own vehicles or help its drivers buy them? And how does preemptively banning this help the public? In fact, it doesn't do anything for the public; it's just a way to stop ride-sharing companies from finding new ways to outcompete established taxicab companies.

2. No taxis allowed

Currently you can use Uber to summon three types of vehicles: black luxury cars, taxis and budget "UberX" cars. The taxis you can hail with Uber are normal, licensed Chicago cabs, and drivers have signed up to participate; it's no different from calling for a cab by telephone or flagging one down on the street, except that it's much more convenient.

The proposed ordinance would eliminate the taxi option for Uber customers by prohibiting taxis from participating in licensed transportation networks. How that could possibly benefit the public is a mystery. If the city adopts this rule, it will be destroying something that makes everyone's lives easier for no good reason.

3. No advertising

Under the ordinance, advertisements wouldn't be allowed on the inside or outside of vehicles. In the short term, that might not matter because, as things stand, Uber black cars, UberX cars and Lyft cars don't have any ads in them or on them; only taxis have ads.

But maybe Uber, Lyft or a future service will want its cars to have ads. And maybe some customers wouldn't mind seeing ads, especially if it meant cheaper fares.
Apparently the city wants to give taxis a monopoly on the vehicle-advertising business. That not only doesn't serve a legitimate governmental purpose; but it also violates the First Amendment.

4. No airport drop-offs

Uber and Lyft cars already aren't allowed to make airport pickups. Under the new ordinance, they wouldn't be allowed to drop off passengers, either. This, of course, serves no purpose except to protect taxi companies from competition.

5. No time-and-distance pricing

Perhaps the proposal's worst feature is that it would prohibit Uber and Lyft cars from charging passengers based on "a combination of distance travelled and time elapsed during service," which is how they charge customers now. Instead, the cars would have to charge a prearranged flat fee or charge customers based on either time or distance – but not both.

That's nonsensical. It's only rational to charge customers based both on time and distance, because both affect the driver's costs, and there's no way to account for traffic conditions in advance. That's why taxis charge based on both time and distance – and it's why taxi companies don't want Uber and Lyft to be able to use this method for charging customers.

6. Mandatory emblems

The ordinance would also require all cars in a given network to have an "emblem" on the outside of their car to identify which network they're in. Lyft already does this with its cars' pink mustaches. Uber, however, doesn't – and its black cars' logo-free appearance is part of what gives Uber cars their distinct cool, classy vibe.

Forcing Uber to add a logo serves no legitimate purpose. Customers don't need a logo to identify their Uber car for several obvious reasons: (1) the Uber app shows them their driver's name and picture, along with the car's license plate number; (2) the Uber app lets the customer see where the car is on a map when it's on its way and when it arrives; and (3) Uber drivers identify themselves upon arrival and confirm that they have the correct passenger.
So the only purpose of this requirement is to make Uber cars a little less special – that is, once again, to hamper competition for the taxi companies' benefit.

7. Big Brother-style GPS tracking

The ordinance would also require the networks to allow the city to monitor all of their vehicles at all times by GPS. But the city has no legitimate need to know where every Uber or Lyft driver is at all times – let alone where their passengers go. If the city needs particular GPS information for a law-enforcement purpose – if, say, a car was implicated in a crime – it can always get a warrant for that data.

Citizens should be disturbed by this invasion of privacy, which violates the Fourth Amendment's protection against unreasonable searches and seizures.

Citizens should also be disturbed by a city government that's more concerned about pleasing a politically connected special-interest group than in letting consumers choose the services they like best. And they should be disturbed that government officials are more interested in continuing cronyism for as long as possible than in letting Chicago thrive in the 21st century.

Chicagoans should demand that city officials either remove these features from the proposed ordinance or, better yet, scrap it entirely and replace it with one that simply declares that these transportation services are legal and may continue operating as they have been.

Jacob Huebert
Senior Attorney
Liberty Justice Center

Is Chicago Like France?

Unfortunately, the answer is yes, if not worse.

For sake of comparison, please consider the New Law in France: Limos Must Wait 15 Minutes Minimum Before Picking Up Rides

To explicitly answer my lead question, Mayor Rahm Emanuel is no Friend of Taxpayers. Rather Emanuel is a friend of political cronies who undoubtedly contribute to his election campaign.

But hey: Chicago is the "City that Works". The question is "For Whom?"

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Have an E Series Savings Bond? If So, It's No Longer Paying Interest; $16 Billion in Bonds No Longer Pay Interest

Posted: 18 Feb 2014 06:04 PM PST

I am not sure if any Mish readers have savings bonds, but undoubtedly some friends of Mish readers do.

For those who do, here is a public service announcement: Nearly 47 Million U.S. Savings Bonds Worth Approximately $16 Billion No Longer Earn Any Interest

Nearly 47 million U.S. Savings Bonds worth approximately $16 billion have reached final maturity and are no longer earning any interest.

Most paper Series E, EE and I Savings Bonds have a 30-year life. Some Series E bonds, which were issued through November 1965, had a 40-year maturity period. All Series E bonds have reached final maturity and have stopped earning interest.

"It's not unusual for people to forget about bonds that were purchased 20, 30, 40 or more years ago," says Jackie Brahney, Marketing Director for SavingsBonds.com. She adds, "Many bond owners purchased the investment for retirement or education purposes and stored them away, but they don't understand how the bonds work."

Bond investors are often unaware of what their bonds are currently worth, interest rate performance, or when they will stop earning interest. Unfortunately, many believe that bonds will only be worth the amount that is printed on the front of them (aka face value), which is considered the initial maturity date. EE bonds will continue earning interest beyond their initial maturity date until they reach their final maturity. Final maturity is when a bond will no longer earn any interest.

If you happen to have savings bonds or know of someone who does, please pass on this announcement.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Hollande Promises Tax Harmonization in Six Years if Foreign Businesses Invest in France Now

Posted: 18 Feb 2014 01:15 PM PST

French president Francois Hollande is seriously deranged if he expects businesses to take him up on his latest offer to Invest in France Now, See Harmonization in Six Years.

Hosting 30 heads of French units of foreign companies at his Elysee Palace, President Francois Hollande pledged to guarantee that taxes on an investment would not rise later - as has happened in the past - and VAT and duty rules for firms would be streamlined this year.

The Socialist president, who last month announced France would phase out 30 billion euros (24 billion pounds) in charges on companies by 2017 to reverse its slide in trade competitiveness, also said French business taxes would be harmonised with those of its neighbours, especially Germany, by 2020.

"A business, whether French or foreign, that wants to invest will have a commitment from the administration that the tax rules will remain the same, and that will be a guarantee."

Skepticism Runs High

Skepticism runs high according to a survey by pollster Opinionway of heads of 253 companies whose revenue grew more than 15 percent in the past three years.

Nine out of 10 chief executives of firms exhibiting strong growth did not believe the government could boost economic output or help their companies become more competitive.
Eighty-nine percent did not consider Hollande able to reduce public spending.

The article notes that Hollande's promise came the same day as a new law was introduced in parliament to impose tough fines on firms that shut operations still deemed economically viable.

The law was prompted by Hollande's 2012 campaign promise to steelworkers at ArcelorMittal's Florange blast furnaces in northern France that he would pass legislation to protect their jobs in case of a shutdown. Despite a government threat to nationalise them, the furnaces were later closed.

Hollande did not give businesses any reason he could be trusted. Nor did he say how he would meet his "guarantee". Please note there is no legal basis for his promise.

He wants 6 more years just to get to the break-even point in competitiveness, but he will be gone by 2020 anyway. This man is completely clueless about two things

What needs to be done
When it needs to happen

Here's a hint Mr. President: 2020 is not even in the ballpark. Besides, no one believes you can even do that!

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

US Household Debt Climbs by Most Since 2007, Mortgage Debt Leads the Way; Annually Student Debt and Autos Lead the Way

Posted: 18 Feb 2014 11:31 AM PST

Given stagnant wages and higher taxes, the only way households can increase spending is to go further into debt.

The New York Fed quarterly report on Household Debt and Credit shows that is what happened.

Aggregate consumer debt increased in the fourth quarter by $241 billion, the largest quarter to quarter increase seen since the third quarter of 2007. As of December 31, 2013, total consumer indebtedness was $11. 52 trillion, up by 2.1% from its level in the third quarter of 2013. The four quarters ending on December 31, 2013 were the first since late 2008 to register an increase ($180 billion or 1.6%) in total debt outstanding. Nonetheless, overall consumer debt remains 9.1 % below its 2008Q3 peak of $12.68 trillion.

Mortgages, the largest component of household debt, increased 1.9% during the fourth quarter of 2013. Mortgage balances shown on consumer credit reports stand at $8.05 trillion, up by $152 billion from their level in the third quarter. Furthermore, calendar year 2013 saw a net increase of $16 billion in mortgage balances, ending the four year streak of year over year declines. Balances on home equity lines of credit (HELOC) dropped by $6 billion (1.1%) and now stand at $529 billion. Non-housing debt balances increased by 3.3 %, with gains of $ 18 billion in auto loan balances, $53 billion in student loan balances, and $11 billion in credit card balances.

Delinquency rates improved for most loan types in 2013 Q4. As of December 31, 7.1% of outstanding debt was in some stage of delinquency, compared with 7.4% in 2013 Q3. About $820 billion of debt is delinquent, with $580 billion seriously delinquent (at least 90 days late or "severely derogatory").

Housing Debt

Originations, which we measure as appearances of new mortgage balances on consumer credit reports, dropped again, to $452 billion.
About 157,000 individuals had a new foreclosure notation added to their credit reports between October 1 and December 31.
Foreclosures have been on a declining trend since the second quarter of 2009 and are now at the lowest levels seen since the end of 2005.
Mortgage delinquency rates have seen consistent improvements; 3.9% of mortgage balances were 90+ days delinquent during 2013Q4, compared to 4.3% in the previous quarter.
Serious delinquency rates on Home Equity Lines of Credit decreased to 3.2%, down from 3.5% in 2013Q3.

Student Loans and Credit Cards

Outstanding student loan balances reported on credit reports increased to $1.08 trillion (+$53 billion) as of December 31, 2013, representing a $114 billion increase for 2013.
About 11.5% of student loan balances are 90+ days delinquent or in default.
Balances on credit cards accounts increased by $11 billion.
The 90+ day delinquency rate on credit card balances increased slightly to 9.5%.

Auto Loans and Inquiries

Auto loan originations decreased in the fourth quarter of 2013 to $88 billion.
The percentage of auto loan debt that is 90 + days delinquent remains unchanged at 3.4%.
The number of credit inquiries within six months – an indicator of consumer credit demand – remained virtually unchanged from the previous quarter at 169 million.

Total Debt

Quarterly and Annual Changes

Annual Changes

Student loans accounted for $114 billion, 63.33% of the overall increase
Auto loans accounted for $80 billion, 44.44% of the overall increase
Combined, student loans and auto debt account for $191 billion, 107.78% of the overall increase

Quarterly Changes

Mortgage debt accounted for $152 billion, 63.07% of the overall increase
Student loans accounted for $53 billion, 21.99% of the overall increase
Combined, mortgage debt and student loans account for $205 billion, 85.06% of the overall increase

Clearly fourth quarter of 2013 was a big quarter for housing, but can it last?

Auto loans had an average quarter, likely downhill from here. Trends in student debt are ominous.

Newly Originated Installment Loan Balances

Growth in auto loans and home installment loans appears to have peaked.

Delinquency Status

Percent of Delinquencies by Type

New Delinquent Balances by Loan Type

Seriously Delinquent Balances by Loan Type

There are 31 pages and many other charts in the report. Inquiring minds may wish to take a look.

Some big cracks beginning to appear? Sure looks like it.

Unless job growth and wage growth pick up, especially wage growth for the bottom half, these trends may be as good as they get given the noticeable cracks and ominous trends in student loan debt.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

China Fooled the World (But It Cannot Last)

Posted: 17 Feb 2014 11:16 PM PST

Steen Jakobsen, chief economist at Saxo Bank emailed a pair of interesting links on the explosion of investment and debt in China.

First consider the BBC report How China Fooled the World by Robert Peston.

Robert Peston travels to China to investigate how this mighty economic giant could actually be in serious trouble. China is now the second largest economy in the world and for the last 30 years China's economy has been growing at an astonishing rate. While Britain has been in the grip of the worst recession in a generation, China's economic miracle has wowed the world.

Now, for BBC Two's award-winning strand This World, Peston reveals what has actually happened inside China since the economic collapse in the west in 2008. It is a story of spending and investment on a scale never seen before in human history - 30 new airports, 26,000 miles of motorways and a new skyscraper every five days have been built in China in the last five years. But, in a situation eerily reminiscent of what has happened in the west, the vast majority of it has been built on credit. This has now left the Chinese economy with huge debts and questions over whether much of the money can ever be paid back.

Interviewing key players including the former American treasury secretary Henry Paulson, Lord Adair Turner, former chairman of the FSA, and Charlene Chu, a leading Chinese banking analyst, Robert Peston reveals how China's extraordinary spending has left the country with levels of debt that many believe can only end in an economic crash with untold consequences for us all.

Will China Shake the World Again?

In part two of the series by Peston (both links are promos for the BBC video that will play Tuesday), please consider Will China Shake the World Again?

Perhaps the big point of the film I have made, to be screened on Tuesday (How China Fooled the World, BBC2, 9pm) is that the economic slowdown evident in China, coupled with recent manifestations of tension in its financial markets, can be seen as the third wave of the global financial crisis which began in 2007-08 (the first wave was the Wall Street and City debacle of 2007-08; the second was the eurozone crisis).

Why do I say that?

Well in the autumn of 2008, after the collapse of Lehman, there was a sudden and dramatic shrinkage of world trade. And that was catastrophic for China, whose growth was largely generated by exporting to the rich West all that stuff we craved. When our economies went bust, we stopped buying - and almost overnight, factories turned off the power, all over China.

I visited China at the time and witnessed mobs of poor migrant workers packing all their possessions, including infants, on their backs and heading back to their villages. It was alarming for the government, and threatened to smash the implicit contract between the ruling Communist Party and Chinese people - namely, that they give up their democratic rights in order to become richer.

So with encouragement from the US government (we interviewed the then US Treasury Secretary, Hank Paulson), the Chinese government unleashed a stimulus programme of mammoth scale: £400bn of direct government spending, and an instruction to the state-owned banks to "open their wallets" and lend as if there were no tomorrow.

Which, in one sense, worked. While the economies of much of the rich West and Japan stagnated, boom times returned to China - growth accelerated back to the remarkable 10% annual rate that the country had enjoyed for 30 years.

But the sources of growth changed in an important way, and would always have a limited life.
Toxic investment

There are two ways of seeing this.

First, even before the great stimulus, China was investing at a faster rate than almost any big country in history.

Before the crash, investment was the equivalent of about 40% of GDP, around three times the rate in most developed countries and significantly greater even than what Japan invested during its development phase - which preceded its bust of the early 1990s.

After the crash, thanks to the stimulus and the unleashing of all that construction, investment surged to an unprecedented 50% of GDP, where it has more or less stayed.

Here is the thing: when a big economy is investing at that pace to generate wealth and jobs, it is a racing certainty that much of it will never generate an economic return, that the investment is way beyond what rational decision-making would have produced.

But what makes much of the spending and investment toxic is the way it was financed: there has been an explosion of lending. China's debts as a share of GDP have been rising at a very rapid rate of around 15% of GDP, or national output, annually and have increased since 2008 from around 125% of GDP to 200%.

"Most people are aware we've had a credit boom in China but they don't know the scale. At the beginning of all of this in 2008, the Chinese banking sector was roughly $10 trillion in size. Right now it's in the order of $24 to $25 trillion.

"That incremental increase of $14 to $15 trillion is the equivalent of the entire size of the US commercial banking sector, which took more than a century to build. So that means China will have replicated the entire US system in the span of half a decade."

There are no exceptions to the lessons of financial history: lending at that rate leads to debtors unable to meet their obligations, and to large losses for creditors; the question is not whether this will happen but when, and on what scale.

Wine Country Conference II

Want to hear a live discussion of what Steen Jakobsen thinks about Europe and China?

Then come to the second annual Wine Country Conference which will be held May 1st & 2nd, 2014.

We have an exciting lineup of speakers for this year's conference.

John Hussman: Founder of Hussman Funds, Director of the John P. Hussman Foundation which is dedicated to providing life-changing assistance through medical research
Steen Jakobsen: Chief Economist of Saxo Bank
Stephanie Pomboy: Founder of MacroMavens macroeconomic research
David Stockman: Ronald Reagan's budget director, best-selling author, former Managing Director of The Blackstone Group
Mebane Faber: Co-founder and the Chief Investment Officer of Cambria Investment Management
Jim Bruce: Producer, Director, and Writer of Money For Nothing: Inside the Federal Reserve
Chris Martenson: Reknown speaker and founder of Peak Prosperity
Mike "Mish" Shedlock: Investment advisor for Sitka Pacific and Founder of Mish's Global Economic Trend Analysis

In addition, we expect confirmation from a number of other highly respected fund managers and speakers. This year's event is two days and will include additional "break-out" groups.

For speaker bios, please check out Wine Country Conference Speakers.

This Year's Cause: Autism

$100,000 of the money raised last year came from a generous matching grant from the John P. Hussman Foundation.

Some of us in the industry who have done well are making an effort to help others. John Hussman is at the very top of that list.

One of John's kids has severe autism. This year, all net proceeds will go to support autism programs.

Conference Details

For further details about the 2014 conference, please see Wine Country Conference May 1st & 2nd, 2014

Nothing Like It!

This event is not just another "come and hear someone talk" kind of thing. Attendees and their significant others can expect an educational, fun, and relaxed time.

Last conference, we arranged wine tours. They were a big hit. We will do so again. One of the wine estates we visited had a Bocce Ball court. On a couple of miracle shots, I won both games I played.

Stay an extra day and golf or travel. I did. The conference hotel is a fun place in and of itself.

Unlike many other conferences, you will have easy access to speakers.

Want to chat with me, Steen, John, or anyone else at the conference? You will have an easy chance.

Not only do we have an excellent lineup of speakers, you will have an opportunity to meet with them, have intimate discussions on important investment topics, with a lot of fun on the side, including wine tours and great wine.

There's nothing like it in the investment business. And your money goes to a great cause! What can be better?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

The California Drought, and How We're Helping

Featured

The California Drought, and How We're Helping

On Friday, President Obama headed to California to tour drought-affected areas and talk to those affected by impacts of one of the state's worst droughts in over 100 years. While there, President Obama announced new actions that the Administration will take to help the farmers, ranchers, small businesses, and communities being impacted.

See the drought's effect up close, and watch President Obama's announcement.

Why Your Brand Shouldn't Fear Assigning Authorship

Posted: 17 Feb 2014 03:16 PM PST

Posted by MarkTraphagen

Over the past two years I've spoken at numerous conferences and written articles beyond counting (including one here at Moz) on the subject of Google Authorship and author authority online. By far the most frequently asked questions I get on the topic are from brands fretting over whether or not to allow individuals to become brand representative authorities.

Typical forms of these questions include:

Wouldn't it be better for our content to be branded with our company name/logo?
Will individual author authority really translate into better exposure, trust, and (bottom line) new customers for our brand?
What if the employee author leaves our company?

The brand-content paradox

While the issues of brand representation by individuals bleed over into many areas (such as social media, conference speeches, etc.), I'm going to focus on what I think is the "hottest" and most important area right now: brand content marketing. In other words, the issue of who or what "authors" your brand's content.

Let me start by saying to brands, "I feel your pain." Or perhaps more accurately, I understand your fears.

The Internet age has created an odd paradox. At the same time that brands have more access to potential customers than ever before, that very fact has made it more difficult than ever to stand out from the crowd. On hotly contested and immensely valuable real estate like Google's first page or Facebook's News Feed, brands contend frantically for attention. I can understand why they would be reluctant to embrace any strategy that seems like it removes the prospect one more step away from the brand name.

However, in this article, I'm going to propose that that "removal" is exactly what brands need to be doing to stand out and win customers in the highly-competitive world of online marketing.

Let me address each of the three questions I quoted above.

1. Shouldn't our content be authored by our brand?

Hello, I'm Brand X!

Since the dawn of advertising, brands have been willing to invest huge sums of money into getting their brand name known. We've gone from cultural icons like this:

to this:

In the "Mad Men" era of the rise of the big Madison Avenue agencies, the focus was on campaigns that "branded" the client brand's name on the minds of consumers. But as brands proliferated over the next 50 years, this became less and less effective. When Colgate and Crest and Close Up all are telling you "we are best at fighting cavities!" they just become a blur when you reach the supermarket shelf.

But even back in those days (or at least in the fictional version of those days), some people understood that there was a unique power in associating a powerful personal brand with a corporate brand:

In that scene Mad Men's Don Draper is taking advantage of a second chance at getting interviewed by a major news outlet. He had blown his first opportunity by being aloof and refusing to give the reporter anything personal. After his Sterling Cooper Draper Price partners threw a fit over the resulting boring newspaper article, Don got the message. As you see in the clip above, when the reporter asks him if Don Draper is the name that defines his agency, he barely hesitates for a moment before responding confidently, "Yes."

You forget a name, but you never forget a face

Have you ever noticed how many Facebook ads use a human face image (sometimes with unexpectedly embarrassing results)?

That's because advertisers know that the human eye is drawn to human faces. That's also the reason you see faces in most ads for law firms and real estate agencies. They get that when making some of the most important transactions of their lives, people want to feel like they're connecting with a real human being.

Google gets that, too.

So they created Google Authorship, the opportunity for individual content creators to verify their original content from across the web with their Google+ profiles. In return, these authors might get search results for their content in Google Search that display their profile photos next to the result:

Not only do these rich snippet results take advantage of our evolutionary programming to be drawn to faces, they reinforce that there is a real human being behind the content. That can have a profound psychological effect on someone scanning down those 10 blue links on a Google search page. It's perfectly true that all the content linked by the non-Authorship results may be by real humans as well. But the author-photo results guarantee it.

Let's get personal

And that leads us to the true value of identified, human-authored content for brands: It's what searchers want. (See proof in this study by Justin Briggs.)

It's a simple fact of human psychology: people will identify with and trust a person long before they'll give the same consideration to a faceless brand.

I often tell the story of my first visit to a huge online marketing conference. I was passing through the crowded corridors between sessions when a stranger grabbed me by the shoulders, held me at arms length, and staring intently at my face, exclaimed, "Wait! I know you from somewhere!" After a moment it dawned on him: "I know! You're in my search results all the time!"

Because I write about topics for which he frequently searches, Google Authorship showed him my face again and again. And as he clicked through, he found my content helpful. So now when he searches and sees my face, he automatically goes to my content first, even if I'm way down the search result page.

Conclusion to Question 1: Personal brands are powerful. People trust and listen to a person before they trust and listen to a logo.

So now a brand might ask me, "Fine, personal brands are effective. But..."

2. Will personal brand authority build a corporate brand?

My guess is that this is really the #1 concern of brands when they are challenged to let employee authors represent the corporate brand. Why should they invest company time and other resources into letting an employee build up his or her reputation online?

I think the response to that lies in the powerful synergy that can occur when a brand is consistently associated with authoritative content that is combined with authoritative persons.

Want proof of that? You're looking at it. Not this post (although I believe it actually is a small example), but the site on which it's published. Why is Moz such a household word in the online marketing industry? There is little doubt that it's largely due to the names of Mozzers we know and trust: people like Rand Fishkin, Cyrus Shepard, Jennifer Sable Lopez, Dr. Pete Myers, and too many others to mention here. They write the content that we have come to rely on as authoritative, trustworthy, memorable, and very shareable.

And when we become part of the audience of people like that, one of their fans, it doesn't take us long to figure out with what brand they are associated. Then the trust and, let's say it, affection we feel for them inevitably gets transferred to that brand.

The face that makes phones ring

Several years ago I was working for an agency that had no blog. At the time I was managing AdWords accounts for clients. I loved to write, but frankly found the 95 characters of a Google ad a little confining. So on my own I started a blog for the company.

I wrote post after post with very little readership. But I kept at it, developing my own style, learning more about my field, and transferring that knowledge into the best content I could create. Then in June of 2011 I got an early beta invite to Google+. My network there took off, and soon my posts were getting widely shared. They started to earn natural links that made them start to rank in search.

As soon as I heard about Google Authorship, I adopted it for all my content. Soon my face was showing up next to search results for my posts. I started to get known as a trusted expert in my field. Out of that came opportunities to speak at major conferences.

And then the agency's phone began to ring.

"Mark Traphagen has helped me time and again with his content online. If you guys have him working for you, you must be pretty smart. Send me a contract."

That began to happen more and more frequently.

Eventually, that was working well enough that Eric Enge at Stone Temple Consulting made me an offer I couldn't refuse to come work with that fine outfit. Eric saw I had reputation, trust, and a large and loyal audience. He wanted that associated with STC. And now it is.

Conclusion to Question 2: If you encourage gifted employees to go out and create a synergy of authoritative content associated with their trusted name and face, your brand will bask and benefit in the reflected glory.

But when I left my former agency, wouldn't that leave them asking...

3. What if that high-reputation employee leaves?

NEWS FLASH: Almost no one stays long term at one place of employment these days. A survey by PayScale revealed that in the Fortune 500 tech companies, mean tenure of employees is about one year.

So if your company allows an employee to invest serious time into creating content and building up her social following, if she gets a sterling reputation in your industry that starts reflecting well on your brand, and even starts bringing you customers, if she leaves is all that down the drain?

Thanks to the power of online reputation and the emergence of Google's growing understanding of entities in semantic search, the answer is a resounding NO.

Through Google Authorship, I stay connected in full sight of Google to all my content, no matter what I do or where I go in real life. At Stone Temple Consulting I continue to work hard to create truly useful content and to build my reputation and authority. As those continue to grow, they continue to benefit the content on my old agency's site. That content continues to get recommended, shared, and clicked on based on my reputation. And that's traffic my former employer can continue to convert.

I've actually had brands ask me if they should remove the content of an employee who has left them, or change the authorship of the content. I hope by now it's obvious why that would be foolish.

Certainly there may be circumstances under which severing the connection would be wise. If for some reason the former employee becomes a public disgrace, or simply starts moving in directions that will not enhance his reputation in your industry, then you might want to disassociate your content. But I would hope such cases would be rare.

(As an aside, it might be a good idea for companies to begin to think about and formulate clear policy on ownership and authorship of employee-generated content, both during employment and after. I can see a day coming when author reputation may become so valuable online that problems could develop if a company tried to remove or change authorship on a piece of content after an employee left.)

Conclusion to Question 3: If a former employee continues to build a great reputation in your industry after she leaves, then that reputation continues to work for your content.

The face of the future

Obviously I am strongly in favor of not only allowing employees to develop high-authority online reputations in your industry, I see it as increasingly essential. The social web has forever changed effective marketing from being impersonal brand broadcasting to highly personal connectivity.

Not only do authoritative employee authors cast a reflected glow of trust and authority onto your brand, they also help humanize it. Even in the "coldest" of industries, at the end of the day, people still want to buy from people they like and trust.

What experiences have you had with developing real human authorities for your brand? What obstacles did you need to overcome? What concerns do you still have about this idea? Let us know in the comments!

Image credits:

Brand X: Purchased photo under a license from shutterstock.com
Burma shave signs: by peterme used under a Creative Commons License
Goodyear blimp: Purchased photo under an editorial use license from shutterstock.com
Facebook ad: From anthroblogia (used by permission)
Darth Vader and Luke: by shaun wong used under a Creative Commons License

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Link Audits: What should you be looking for?

Posted: 18 Feb 2014 01:37 AM PST

Link Auditing

Link auditing has been something that has been examined for a considerable time within SEO, but has never been as important as it is in today's changing landscape. Since the Penguin algorithm there have been SEOs up and down the country conducting link audits, not just to identify penalties but to ensure there isn’t a possibility of getting in trouble.

Due to the algorithm updates, the way people conduct audits has changed, as have the metrics and type of information and/or websites they look at. We are constantly looking to improve what we do internally at White.net, and I wanted to share with you some of the metrics that we look at and the reasons behind them.

I have even managed to rope in a few others to give their thoughts on what they look at when conducting a link audit.

What's Changed?

It’s long been known that the quantity of links is no longer a factor in the algorithm. Rather, it is the quality of the linking domain that provides the value. Therefore, there is little point, except for benchmarking, in looking at the total number of links pointing to your domain, especially if you have identified that the majority of those are low-quality links such as directories, website comments and articles.

What to look for?

Although most of the industry has changed the way that they are acquiring links, there are still some who continue to acquire links unnaturally, or who have used this technique in the past. This all means that you need to be extra vigilant when looking through your link profile. It's important that you can spot any trends and issues to ensure that you action something instantly.

Below are a number of factors (not all) that we look at when conducting a link audit:

Authority/Influence Score
The majority of us use some kind of score when looking at links, whether that be Domain Authority from Moz or Influence Score from MajesticSEO/Linkdex, as it gives you a very quick and visual look at the state of your link profile. As with anything, this is a top-level view and you also need to manually assess those links.

This is generally one of the first things that I do when conducting a link audit. I can quickly see if there is a major issue, especially if the chart is showing more links to the lower side of the authority/influence score. Once I have done this, I can then dig deeper into those links that are below where I would hope them to be, and this provides a good starting point for analysis.

Linking Influence Score

*The chart above is also a very good way to represent it when showing clients. It allows them to easily understand the state of their link profile without going into too much detail.

Where are your links from? (Link types)
So all your links are from directories and guest posts! That looks natural.

By looking at the link type, you get more information on how natural your profile is, and what you need to be considering moving forward. There are a number of tools available for you to see quickly what link types you have, such as Link Detective and Linkdex.

The ideal scenario is that you will have a number of links from everywhere: directories, blog posts, news, image banners, text, followed and no followed links, all with different or natural anchor text. This will be classed as much more natural link profile than if they all come from a certain tactic.

If you do spot areas of concern, especially if the majority of your links are coming from the same area, then you need to think carefully about what value they are providing, and how this will affect your strategy going forward.

Things you should be looking for in more detail are:

- Site types (blog, news, directory, forums, etc.)
- Link type (images, text)
- Followed vs NoFollowed

Anchor text distribution
Brand variations should always be the main terms you find when having an initial look at your link profile. If your brand doesn’t occupy the top 5 to 10 then you are likely to be in some serious trouble. People don’t naturally link by your core terms! People link with Brand, URLs, Click here, etc. This is natural!

If you do spot that your anchor text distribution is predominantly non-brand, then you need to consider whether they are good links, or if they should be removed. If they are good links, then you need to be thinking about a brand building campaign that will drive natural brand links to your website with the aim of having a more natural profile.

Anchor Text Distribution Chart

Links from the same IP
If you have links from the same IP, then this could be seen as a clear signal of networking. Building lots of links across a network of websites that sit on the same IP can be seen as a manipulative technique and possible lead to penalties, whether manual or algorithmic.

Being able to spot IPs can be somewhat difficult if you use standard tools, but you can pull these in with either the Excel for SEOs tool or by using other paid tools such as LinkRisk.

Once you have this information you should filter it in order, and go through each of the links. You are likely to see a pattern, whether it be a type of site, such as directories (most probable), or blogs that are all on the same topic. Either way, they are likely to need removing, but this is something that you need to consider before starting out.

LinkRisk Profile
As previously mentioned, Penguin has caused many people to be looking at their link profile for all types of reasons. But now no matter what you are doing an audit for, you need to be looking at it with penalties in mind, and how you can prevent your client/website from getting one.

We have been using LinkRisk as the first stage of risk identification, with clear scoring patterns that allow you to quickly see the health of the website. However, once a report has been created, we also go through manually checking to ensure that a human eye has been cast over every domain. Time-consuming, I hear you say? Well yes, but algorithms can make mistakes no matter how complex they are, just ask Google.

During this process we look at the links from a human perspective asking ourselves some questions:

- Will this link drive traffic?
- Has this link been built for SEO purposes?
- Was this link built via manipulative/paid means?

If our answers aren't "Yes", "No" and "No", then we start to create a list of website owners to contact to have them removed or to create a disavow file. This is a key part of our link audits, and one that is highly recommended being in yours.

LinkRisk Score

But these are just my thoughts, what do others think?

To help me with this, I asked Paul Rogers and Paul Madden (All the Paul’s) for their thoughts on what to look for when auditing a website.
Paul Rogers

“For me, link auditing is one of the most important skills for an SEO professional to have these days – as unnatural link patterns represent a huge risk for websites and they can often be difficult to detect.

I start by outputting links (from multiple data sources) into a spreadsheet and apply formulas to identify low quality links (e.g.: targeted anchor)

There are lots of things to look out for when auditing a link profile, such as:

- High number of similar links (group of sites, c-blocks, similar format etc.)
- Suspicious looking individual links (sitewide, directory, comment etc.)
- suspicious looking trends (directories, networks etc.)
- Obvious footprints (guest post, sponsored post etc.)
- Links from sites that clearly sell links

These are just a few to go alongside what you have mentioned, but there are hundreds of signals to be looking out for.

These days, even websites that have never been impacted by the penguin update should be looking to optimise their link profile, in order to future-proof their organic visibility.”

Paul Madden

“Doing a link audit is a skilled task and shouldn’t be left to someone without the correct level of experience.

Some things to consider when you are doing a link audit include: -

Try to use as many data sources as possible for the initial audit. Our experience suggests that the best sources in declining order of importance are: -

Google Webmaster Tools

Majestic SEO Historic and Fresh

Ahrefs

Existing client SEO link building reports

Moz

Bing Webmaster Tools

If the site is under penalty then you will have to confess to and reverse nearly all the SEO activity within the profile before you can expect to escape the penalty. This includes removing or disavowing all commercial anchor text links and all links from site types that have been used to gather links over the years. This would include directories, articles, sponsored links, widgets, site wide (sidebar, footer and widget links) and nowadays you’ll have to look more carefully at things like detectable guest posts and press releases.

Think about the links you see in the profile in terms of what is algorhythmically detectable and what is not. This will include thinking about things like obvious footprints as well as looking at whether the linking site is likely to have appeared on Google’s radar already in other penalties and disavow data.

We have literally thousands of disavow files now uploaded to LinkRisk and its been very interesting to see what the quality of that data tells us about the thinking of most SEO’s when doing the disavow and cleanup work. Our most disavowed domain has been disavowed at “domain:” level over 180 times so far (I can’t name it I’m afraid) and people have even been disavowing the highest quality domains in an attempt to wipe the slate clean (domain:youtube.com 52 times / domain:bbc.co.uk 12 times!). This also tells us something about Google’s expected ability to use the disavow data against us… its patchy as far as quality for web spam detection at best.

When you submit your disavow you have two choices to make on timings. You can wait for the Google cache to update on the sites where you have had the link removed (a few weeks typically) before submitting the reinclusion request so Google can confirm that they have gone (this is our preferred method). You could also submit the reinclusion earlier but this will sometimes necessitate the disavowing of many of the domains that have actually said they will remove or Google will be unable to confirm that the removals have taken place.

Whilst its tempting to get the reinclusion in quickly I would strongly suggest that, on moral grounds, disavowing should only be done as a last resort and its unfair to disavow if the site owner is working with you to remove the links.”

What’s Next?

As links change, and in some people’s thought become less important, what else should you be looking at?

Well, this is something I have been thinking about for a while, and I think there will be two additions to those metrics above.

Social counts at page level. This will be based on the ability to reach a wider audience by sharing your content, allowing you to increase authority, traffic and, of course, build links. This metric will allow you to see how well it correlates with those pages that have attracted the most natural links.

The other area that I feel we will be looking into going forward, is looking at the person that has placed the link. Are they an authority within your industry or niche? Do they link to competitors? What websites are they linking from? Do they have a good following?

I think these are two metrics that will be looked at increasingly over the coming months and years as these link audits evolve.

So, those are some of the metrics that we look at when conducting a link audit, but don’t think that's the job done! At the end of the audit, you need to be able to produce some actionable takeaways to show the client. Do they need to remove links? Is there a gap that needs to be filled? Do they continue doing what they are doing? These are the types of questions you should be able to answer, adding to your strategy moving forward.

What do you look for when auditing a website? Do you disagree with any of the above? What other items would you suggest adding to an audit document? I would love to hear your comments below and of course on twitter @danielbianchini.

The post Link Audits: What should you be looking for? appeared first on White Noise.