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The Cost of Cheap

October 27th, 2011 by Troy Newport


What’s the trade-off?

Have you ever stopped to wonder how one company can offer a product at a much lower price than another?  As an internet marketing company, we are exposed to many businesses in many industries that operate under many different business models.

As we delve into the discovery process with each of our clients we uncover their core business strategies and how they position themselves against their competitors.  The conversation almost always arrives at a point where our client talks about a competitor whose primary strategy is to undercut everyone on price.  The natural question is, how do they undercut everyone on price?  This is when our clients begin listing all the shortcuts their competitor takes and laments “if only their customers knew….”

Everyone understands that just because you spend more money on something, it doesn’t mean it is a better product or that you get more value out of it.  But if something costs less than normal, what does that imply?

Over the years I have acquired exposure to more industries and niches than you can imagine.  The stories I’ve been told by credible business people about their competitors and the types of shortcuts they take to position themselves as ‘the cheapest’ has made the hair stand up on the back of my neck more than a few times.  It has also made me a much better consumer, because in many cases I know the right questions to ask before hiring a service company or buying a product. 

There are plenty of shortcuts in our industry too.  We are a technical field, after all.  Automation is something that techie people can accomplish with ease.  So if you are shopping around for web development, social media or SEO services and some of the companies you talk to are much lower-priced than the others, you need to investigate why that is the case.

For example, you’ve probably seen all the “build your own website” commercials where you choose a pre-built template and have your website up in a night.  From a marketing standpoint that means your website will not have a unique identity because there are likely thousands of other people out there with the same design you have.  What consumers also don’t understand is that your website is going to be on the same IP address (the unique identifier the search engines use to differentiate your website) with hundreds, thousands, or even tens of thousands of other websites.  That means you are starting at a major disadvantage with the search engines from the start.  If one of those other websites are using untoward tactics to get their website to rank high on the search engines, it can impact all the other websites on your IP address.

For social media, it may mean they are setting up automatic feeds to populate your social media channels.  That means they are just regurgitating the same information in your social media channels that exists everywhere else on the web.  Why would people want to get that information from you when they can get it from their normal media channels?  It also positions other people as experts instead of your company.  Why are you spending money on this if it isn’t going to show a maximum return?

Search Engine Optimization is especially notorious for shortcuts and automation.  Everything from software that takes real articles found online and “spins” them into a new article, to programs that crawl the internet looking for unsecured websites, automatically hacks them and installs links to your website.  The problem is that Google is very aware of these tactics and can detect them.  If they see your website participating in these tactics it may get you banned from Google altogether.

So it may not be sexy to talk about the work required to make online marketing truly work for your company.  If you are making short-term decisions based on budget, make sure you are adjusting your expectations and planning to allocate appropriate budget toward your online marketing in the future.  But don’t wait too long, because you can’t afford to short-change your company by not paying attention to your online marketing.

 

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