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March 26, 2009

Independent SEM/SEOs: Issues & Answers

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I’ve moseyed over to the Issues & Answers track. The moderator is David Hoffman, founder of Search Smart Marketing. The speakers are: Patricia Hall, managing partner of Hallmark Capital; Yuval Marcus , counsel at Gottlieb, Rackman & Reisman, P.C.; Heather Rogers-Symon, assistant director of business development, HUB International, Northeast; and Kathleen Fealy, president of KF Multimedia & Web, Inc.

Independent SEM

David says that we often forget to pay attention to our business needs as we try to take care of the needs of our clients. Kathleen is up first.

When it came time to renew her E&O insurance, her insurance broker said that SEO was a high risk profession. They considered SEO irresponsible. Kathleen argued the opposite so she asked her contacts who they were insured with. The problem was that smaller companies were hurting their clients and getting in trouble. From that situation she learned the importance of education, not only for her clients but for her insurance provider as well.

It took about three emails and contracts with indemnification clauses and warranty clauses that explained she couldn’t control algorithms but she would try to improve visibility. She had to make it clear there was no guarantee of placement. As a smaller agency she had to be prepared to answer all the questions. Even her attorneys didn’t understand SEO well enough to help her prepare her answers. Make enough time to help your attorneys, brokers and accountants understand SEO so they can help protect you.

Heather Rogers-Symon is going to present on the Xs and Os of insurance for search engine optimization and marketing companies. Most people she deals with don’t know about insurance.

The Bracket:

  • Business property
  • Business disability
  • Business general liability
  • Umbrella or excess liability
  • Worker’s compensation
  • Professional liability
  • E&O

There are a lot of different insurance coverages available.

Ask your contacts and get your questions answered. Protecting your business from risk is the foundation of success. Take the time to investigate your insurance needs from professionals and peers.

Get your head in the game:

How is your business prepared for an interruption? Or damage to your firm’s repuration?
Are you covered for copyright and trademark infringement? Other media activities?
How would you handle business errors?

First Half: Business Owners’ Policy

  • A BOP offers building, property and general liability coverage under one policy.
  • Protects your company’s computers, networks, valuable papers and office furniture.
  • Provides coverage from damage from fires, electrical surges, business interruptions, water damage, and even embezzlement by an employee.

It’s cheap and covers a lot of things.

Second Half: Professional Liability

Errors and Omissions are not covered under a GL or a BOP policy. A SEO or an SEM can be sued by a third party that suffers an economic loss as a result of their company’s actions or errors.
As clients’ expectations of performance increase, lawsuits against professionals increase accordingly.

Wrap Up: Insurance is not one size fits all.

You may be put inside a box, but figure out a plan with your broker that fits you at the best price.

David asks how many in the audience owns their own business. Most raise their hand. He asks who has the insurance Heather was talking about. Maybe two people raise their hand.

Yuval is next and will talk about basic intellectual property and trademark concerns that come up in this industry.

Ask yourself:

  • If a competitor tarts using a similar name, domain name and/or logo, what can you do?
  • Does your company have the right to use its name, domain or logo for SEM services?
  • Does the company own its Web site, logo and domain properties?

Trademarks are brands and source identifiers. It can be a word, a logo and even a smell. Copyrights cover creative expression and give owners the right to prevent copying by others.

The benefits of trademarks:

  • A brand with proper trademark protection has value and can be sold, licensed to generate revenue or used as collateral to secure financing.
  • Owners of trademarks have the right to prevent others from using confusing or similar marks.
  • They can be extended indefinitely.

There are trademarks that are better than others.

  1. Arbitrary and fanciful (strongest): For example, Apple computers or Kodak
  2. Suggestive (weak): For example, Coppertone sunscreen
  3. Descriptive (weak): For example, Fish Fri fish batter mix
  4. Generic (incapable): For example, the name of the category

How to acquire trademark rights:

  • Common law rights
    • Use of mark on goods or in connection with services
    • Use without registration limits rights to areas where use takes place
  • State registrations
    • Protection in state where registration obtained
  • Federal
    • Nationwide
    • Must use mark in commerce
    • Unlimited duration

To avoid trademark infringement, conduct a trademark clearance search for company name, domain name and logo. The availability of a corporate name or domain name does NOT mean you can use that name. Trademark clearance searches cover:

  • PTO database
  • State trademark databases
  • Common law uses:
    • Internet
    • Business names
    • Domain names

Copyright protects original and creative works of authorship fixed in a tangible medium of expression. Copyright protection is automatic when it is fixed (this can be written or recorded in video, for example).

Promotional materials, logos, software and training materials are all included. The person that creates the work owns it and can reproduce copies, create derivative works, distribute a work to the public, and perform/display the work publicly. Even if you contract the creation of a logo, you need the artist to transfer the copyrights to you.

By creating strong trademark rights, you increase the value of your company and can stop competitors from using confusingly similar brand names, domain names and logos. Always conduct a trademark clearance search. With copyrights, if you retain a non-employee to create your content, be sure to get all the rights transferred to you.

Pat is going to talk about the outlook for mergers and acquisitions in this economy. She’s going to cover the M&A market in 2009. Is this the year to hunker down and ride out the storm, sell out, combine with other firms or seek acquisitions? How have the valuations of independent SEOs been impacted by the turmoil in the financial markets? What is the outlook for revitalized business activity in 2009? Regarding competitive positions, how do you enhance the value of your company in case you’re looking toward M&A in 2009?

Hunker Down, Sell Out, Merge or Acquire

Risks in 2009: The main risk is do you have financial reserves? If there’s a dip in client business can you hold out?

Opportunities in 2009: There may be companies out there now that never considering selling. Sometimes you can find very good companies that happen to be in trouble, but it has nothing to do with the quality of their operations.

Know your strategic options and figure out where you stand in the equation. What paths are available to you and how would they impact your business. Should you play it safe or go for gold: What is your risk tolerance? It’s a risk/reward equation with no right answer.

How Have Valuations Been Impacted?

Demand drives value: Generally, valuations are down 20 percent. Good companies’ values are holding steady. Great companies are still seeing premiums, although not as high as in the past.

Strategic buyers are looking: Companies are looking for help in SEO and SEM fields and are prepared to pay to get it quickly.

Value is in the eye of the beholder: If you want a better value, create a better story for why you’re different than competitors.

Outlook for revitalized business in 2009

U.S. online ad spending will double over the next five years. She has seen a stronger tendency this year for a “wait and see” approach. But she views this as an artificial approach. People still need your business so it’s really pent up demand and there will be a catch-up phenomenon she predicts to see by the end of the year.

The good news is that SEO is here to stay. To enhance businesses, adjust your tactics. Instead of trying to see increased budgets from clients, maybe you want to keep the budgets and make your work more efficient. Among clients there are always smart leaders and slow followers, but in 2009, both parties can be good for your business this year. Be patient with slow followers and the business will come back. At the end, the impact of SEO on the bottom line is what will give you buyers.

Competitive positioning enhances your company’s value.

Client lists are more important than ever. Sustainable revenue generation reduces the perceived risk. A unique market niche or a technology hook can help you differentiate yourself. What is it about your company that will carry you through downturns and into the future.

Take aways:

  • Know your strategic options.
  • Strategic buyers are looking.
  • SEO is here to stay.
  • Your client list is golden.




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