Search Engine Optimization Firm Sold For $95 Million

Search engine optimization is sometimes characterized as a cottage industry, but there are plenty of companies that take an industrial approach to generating traffic for clients. Case in point is Website Results, which was purchased by Internet advertising company 24/7 Media in a $95 million stock deal. That's a lot of cottages.

To my knowledge, Website Results is the first major SEO firm ever to be acquired. It certainly is the first to receive such a high valuation. Any other SEO firm that I can think of remains privately held, so values are hard to come by. In an investors conference call after the acquisition, 24/7 said that Website Results is profitable and earned over $6 million in the first six months of this year. The high-margin revenue stream from Website Results is part of what 24/7 expects to help drive its company to profitability.

Website Results is almost certainly what I would describe as a doorway page firm. Companies turn to doorway page firms seeking traffic from search engines. To generate this traffic, doorway page firms create pages they hope will rank well for particular terms, on particular crawler-based search engines. The more advanced doorway page firms combine this with "cloaking," which means that human beings see pages different from those shown to search engine spiders. Cloaking allows doorway page firms to bill clients only for traffic they actually receive, plus it protects the coding of successful pages from competitors.

I can't confirm that Website Results operates exactly in this fashion, because despite having over a week of lead time (and well before today's US holiday), 24/7 failed to schedule a phone interview and only managed to respond to email questions by last Friday. In my email, I asked specifically whether Website Results used a cloaked doorway page system, and 24/7 chief financial officer Andy Johns essentially ducked the question, with this response:

"Website Results combines proprietary technology and business processes to help sites drive incremental traffic. Their solution is focused not only on getting additional referrals, but also on making certain that the referrals are highly-qualified, so that there is also the best conversion rate. Their proprietary systems provide a means to measure the incremental traffic, which provides accurate billing."

All clear? Let me do some translating. Website Results probably does used cloaked doorway pages -- every major performance-based SEO firm I know of does. "Incremental" traffic means that Website Results clients are probably told the company's work will drive additional traffic to them, rather than being a major source of visitors. This is because search engine optimization is not an exact science and no one can guarantee anything on the non-paid placement search engines. However, clients can probably expect the traffic to be extremely well targeted, which converts well. "Proprietary" technology and systems probably means cloaking or some other method built in house to measure traffic and maybe some automation in trying to reverse-engineer what search engine ranking algorithms prefer in pages.

The use of cloaked doorway pages is a charged issue in the search engine optimization industry. Some SEO providers hate it, feeling it doesn't serve clients well, and there are also concerns that it can be used to hide copyright infringement. Other SEO providers recognize that it can be the perfect solution to helping clients. It can be difficult to impossible to get major web sites to make design changes that would help their sites produce more traffic from search engines. Indeed, some sites that are built using frames or those that deliver pages out of a database can be virtually invisible to crawler-based search engines. The use of doorway pages can sometimes be the only way these sites may be found.

As for the search engines themselves, attitudes vary. The typical response is that they don't like cloaking, but when described in less aggressive sounding ways ("relevant content targeted toward particular phrases"), most of the search engines will grudgingly admit they either don't have a problem with cloaking or won't take a hard look at reports of it, if the pages are ultimately redirecting users to content relevant for their search.

"Detecting the user agent and providing relevant content can be a good idea," said Google president Sergey Brin, during a panel of search engines at the Search Engine Strategies conference held last month. "The real issue is if the content provider is trying to mislead," said Matthew Hall, Inktomi's vice president of engineering, also on the panel. Echoing this was another panelist, Excite's director of product management, Lynne Mariani: "If you are attempting to mislead, that's where we have a problem with it.

Obviously, a negative attitude on cloaking in the future could affect the profitability of Website Results and similar companies. But, at the moment, 24/7 feels it is on firm ground.

"In our due diligence process, we talked with many of the search engines. Their reaction to optimization was neutral to slightly positive. As long as the optimization process is handled properly both technologically and ethically, then search results actually will improve for the individual consumer, which is beneficial for the search engines' relationships with the Internet community."

Of course, rather than try to fight cloaking, the crawler-based search engines have instead concentrated instead making more use of "off-the-page" ranking criteria such as link analysis that cannot be easily manipulated. There's also been more reliance on using human-powered information for generating the primary results at some search engines. These types of moves are designed to make doorway pages less effective. This is evidenced by the fact that SEO firms now talk less about positioning clients for particular phrases and more about bringing them targeted "incremental" traffic, to use 24/7's own terminology.

Indeed, one speaker at Search Engine Strategies, who uses a variety of SEO firms to help promote high profile clients, summarized the use of such companies as "low volume" solutions compared to other online marketing activities. However, Avenue A's Cliff Hawk did stress the return on investment with SEO firms was good, in terms of cost per click and conversion.

So, companies like Website Results aren't likely to generate enough traffic to make or break your business, but they can still generate valuable traffic that you may want. Assuming you have a budget, why not use them? The main concern I hear from readers is fear of being banned by search engines. It's typical for the companies to pitch that they use only "acceptable" search engine optimization techniques, but how do you know if this is really the case?

First, look at the client list. If they have big clients, you are less likely to get into trouble. For example, Website Results lists clients such as eBay and E*TRADE. To keep these clients, they aren't likely to start doing things that get search engines annoyed. Or, if they do, then you are in good company to claim ignorance in case of any fallout from search engines. The search engines are hardly going to ban eBay from their listings, and thus you shouldn't get banned for doing the same thing.

Second, ask for references. This is a basic fact of any type of service you buy, and it's no different when it comes to search engine optimization. If you are worried about a vendor, ask for some references and talk to some clients about their experiences.

Third, ask the search engines. Use feedback forms to send email to the search engines about what a company proposes to do for you. Or, send an actual letter. Don't be surprised if you get no response. If that's the case, fine -- at least you made the attempt to get some advice, and it is something you can fall back on should a search engine later try to take action against you.

Finally, in the investors call, Website Results was described as "the only company delivering search engine traffic which has developed a robust, scalable technology infrastructure to implement modifications on an immediate and continuous basis."

I don't know how 24/7 is backing up this statement. There are certainly other SEO firms that would also claim to be the same, in terms of robustness and scalability. As for implementing modifications immediately, don't interpret this as to mean Website Results can influence rankings on crawler-based search engines instantly. It still remains that no one can do this. It typically takes a week to several months for changes to appear at crawlers, and -- as said above -- no firm can guarantee to control the listings at a non-paid placement search engine. The only immediate modifications Website Results or any other SEO firm should be able to make is at a paid-placement search engine, such at GoTo.

24/7 Media

Website Results

There's nothing really here, unless you are a client, so use the 24/7 Media link above, if you are interested in services.

24/7 Media Acquires Search Engine Optimizer, Aug. 24, 2000,2171,12_444981,00.html

More details on the acquisition.

24/7 Media Tries to Climb out of DoubleClick's Shadow, Aug. 24, 2000

More details about 24/7.

24/7 Investors Conference Call Transcript

Read more about what 24/7 executives had to say about the Website Results acquisition

Search Engines and Legal Issues: Pagejacking
Cloaking and doorway pages have been involved in pagejacking cases. More information can be found here.

Avenue A

Avenue A does a many of things to help its high-profile client base build traffic, including working with a variety of SEO vendors.