R.C. Willey is famous for not being open on Sundays.  When Warren Buffett, the world’s greatest investor, purchased R.C. Willey, this home furnishing chain only had stores in Utah.  After the purchase Bill Child, the CEO who remained with the company, wanted R.C. Willey to open a store in Idaho.  Up to that point, the only R.C. Willey stores were located in Utah.  Warren Buffett refused, believing that the closed-on-Sundays policy would make expansion outside Utah unsuccessful.  Bill Child believed in the Idaho expansion so fervently that he offered to front all the cost for the land and the new store personally.  If the store was not successful, it could be shut down and R.C. Willey would not lose any money.  If the store was successful, R.C. Willey could purchase the store from Bill Child at a price not much higher than what Bill had invested.  Warren accepted, the store in Idaho was built, and it was so successful during the “soft” launch that by the grand opening, Warren Buffet jokingly took credit for the Idaho expansion idea.  R.C. Willey has since expanded to Nevada with similar success.

One of the recurring themes of this book that stood out most were the defining moments in the history of R.C. Willey, and Bill Child’s leadership and decision-making during those moments.  R.C. Willey had many situations where the future of the company hinged on a single decision.  Many people look back at success that could have been and say “what-if.”  Bill Child lead the company through many defining moments that could have made or broken R.C. Willey, and traded “what-ifs” for a world-class success.  Here are a few examples:

(1) R.C. Willey was started by a man named R.C. Willey, who was Bill Child’s father-in-law.  Bill Child had gone to college intending to be a teacher.  Shortly after Bill finished college, he received an teaching job offer, and intended to pursue that career.  Before Bill he accepted, R.C. Willey believed he had ulcers and asked Bill Child to watch the store for a few weeks while R.C. took a vacation with his wife.  R.C. returned early from his trip, discovered he had cancer, and passed away soon thereafter.  Bill discovered quickly that the accountant had not been paying the bills and that the store had a huge amount of debt.  Bill and R.C.’s widow met with the company’s banker who recommended the company fold because of the huge debt load and the passing of R.C..  Bill Child refused to quit, gave notice he would not accept the teaching job, and spent the rest of his career building the R.C. Willey business.  If R.C. had made the easy decision to teach and walk away from the huge debt, his business career would have been over before it started.

(2) When Bill Child took over R.C. Willey, the store sold only home appliances.  Bill decided to expand the product line to include home furnishings, and feels if they had not made this decision they would have stayed a single store, and would have been forced to close when “big box” stores entered the market.

(3) In the early days of Bill Child’s success with a single store, a large percentage of his sales came from military personnel who worked on a nearby base.  Bill anticipated government cutbacks on military spending.  Instead of cutting costs and contracting to weather the storm, R.C. decided to expand to a second store in the Salt Lake City metro area.  When the military cutbacks happened, R.C. Willey had diversified and was even stronger than before.

(4) Bill Child invested in television advertising when other home furnishing companies did not see the value in this type of advertising.  Because of this decision, he was able to cut a “remnant” advertising deal to purchase a large amount of unsold advertising space before “remnant” advertising deals became popular.  As a result R.C. Willey received a phenomenal amount of advertising that the company never could have purchased, and experienced growth they could not have otherwise achieved.

(5) When the credit markets made it hard for R.C. Willey customers to receiving financing from traditional sources, Bill Child decided the company would offer financing directly to the customers.  The company’s financing arm became one of the key elements of R.C. Willey success.

When faced with adversity, many business leaders retract.  Bill Child knew how and when to keep moving forward instead of stepping back when times got tough.  In the end, R.C. Willey was rewarded with a $170 million acquisition by Warren Buffett, the brightest investor of our day.

In closing, here are few Bill Child quotes I enjoyed:

“Be motivated by excellence, not money.  You need to be better than all of your competitors.  If you are, the profits will come.”

” Offer customers true value on quality products.  A low price on a cheap piece of furniture is not value.”

First, selecting the best ad network often depends on the niche of your site. For example, if you have developed a classic cars site that caters to men, Gorilla Nation (which focuses on selling ads for men’s websites), might be a great place to start. I’ve heard of niche ad networks for health, dating, travel, blogs, women’s websites, financial services, social networks, mobile devices, etc. Search engine ad networks (such as Google Adsense, Yahoo Publisher Network and Microsoft adCenter) provide targeted advertising generally related to the content of the page. Targeted ads generally sell for a lot more than untargeted ads, and it can be difficult to break into new niches, so finding an ad network that is already selling ads targeted in your niche is very important.

Second, it is important to select a larger ad network if you can find one that sells ads in your niche. Many of the larger advertisers and advertising agencies will not work with the small ad networks which deliver much less reach and return for their effort. The following chart (Source: ClickZ and ComScore) shows the largest ad networks in order of unique visitors as of January 2008. Comparing the number of visitors using each ad platform is one good indicator of the quality of the ad network, just as the number of people in restaurants can be a good indicator of the quality of the restaurants.

Platform-A is owned by AOL and has just debuted in the #1 spot, as it merges the advertising from all of the AOL properties, lead by Advertising.com. AOL has spent nearly a billion dollars purchasing companies to create Platform-A, such as Lightningcast (online video ads provider which AOL purchased for $100 million), Third Screen Media (mobile ads provider which AOL purchased for $105 million), AdTech (ad serving service which AOL purchased for an undisclosed price), Tacoda (behavioral targeting service which AOL purchased for $247 million), Quigo (search engine marketing and contextual advertising provider which AOL purchased for $347 million), Perifilliate (CPA marketing service which AOL purchased for $125 million). Platform-A has the potential to be something amazing and is something that should be watched closely. However, Platform A has not yet lived up to its potential and has not yet created an ad network sufficiently compelling to lure me to use their services.

Third, the growth trends of the major ad networks is another key indicator of the future quality of the ad network and the culture of innovation within that organization. Growth rate is one of the best indicators of the future growth of of the ad network. The chart below (Source: eMarketer) shows the growth rates of leading ad networks. According to this chart, Google’s projected growth rate for this year of more than 30% and its historic growth rate far surpasses any of the competitors.

Fourth, it is important to determine the advertising behavior of the visitors to your website. For example, if you have a blog, forums or social networking site, which has a large percentage of repeat visitors, it might be more effective to use a CPM (cost per thousand ads displayed) model. The same would be true if advertisers are not willing to bid a lot for the keywords related to the topic of your site (such as a site for fans of your favorite sports team). However, if the content of your site is primarily about topics for which advertisers would bid higher amounts to reach (mortgage, cars, etc.), or if your website attracts a large percentage of new visitors, then a CPC (cost per click) model would often be more effective.

One of the first questions you should probably ask is whether your site can generate more revenue in a CPM or CPC model. As a general rule, CPM advertising with ad networks will generally pay about $3 to $4 for every 1000 times an ad is displayed on your website, but this can vary substantially.

If a large percentage of your traffic is from visitors outside the United States, this can also be a red flag for some of the ad networks. Also, if the URL of your website contains keywords not related to the topic of your site, that can cause confusion for the contextually targeted ad networks and result in untargeted advertising.

Fifth, it is important to provide variety of ads on your website. It is generally better to rotate several different ad networks so that a wider variety of advertisements and ad formats are displayed on your website. If you select Google Adsense, you should enable the graphical ads from third-party ad networks to help provide this variety. You do this by opting in to image ads, enabling advertisers to target your Adsense channels, and then opting in to placement targeting.You can also use the Google Ad Manager to rotate in multiple ad networks and select the one providing the highest return. This variety can often increase the click-through rates and revenue earned. This variety will also help you to better determine which ad networks should receive more or less of your available ad inventory.

In addition to Google Adsense you may want to experiment with some of the following ad networks to see which combination works best for your niche site:

• Yahoo Publisher Network
• Advertising.com (purchased by AOL)
• BlueLithium (purchased by Yahoo)
• AdMarketplace
• ASDAQ (a service of ContextWeb),
• Direct Media Exchange (a service of Right Media),
• Vibrant Media IntelliTXT (in-text advertising)
• Kontera (in-text advertising)
• Tribal Fusion (not the strongest interface)
• SnapShots Ad Network
  
• Text Link Ads
• AdBrite
• SpecificMedia (focuses on larger websites)
• Quigo (purchased by AOL)
• Azoogle
• ClickBooth (cost-per-acquisition ad network)
• FeedBurner (advertising on feeds, such as a blog RSS feed, purchased by Google)
• Social Media (social media advertising)

The number of ad networks on this list seems almost unmanageable. However, select the ones that make the most sense for your site, then use PubMatic. PubMatic is an amazing free service which rotates the ads from different ad networks on your website, testing the ads from each ad network in each ad position, and automatically displaying the ads that perform the best on your website.

If your site is large enough to hire an in-house ad sales team, you can probably generate more income from your advertising inventory than these ad networks, but until then, these competing ad networks provide great solutions to help smaller websites increase revenues.

Which ad networks have you used and which have or have not worked well for you?

Over the past day or two, several new acquisitions have been announced to help illustrate this trend; some are a lot wiser than others:

CBS has agreed to purchase CNET for about $1.8 billion cash. CNET is a top 10 US internet property with a network of computer-related sites, such as CNET, ZDNet, GameSpot, TV.com, MP3.com, News.com, Search.com, BNET, MySimon, and TechRepublic. This was a smart acquisition for CBS as they attempt to get a strong hold in the Internet, which seems to be eluding them. I can envision several ways that CBS will be able to leverage the CNET and CBS brands, such as a CNET computer cable channel and better distribution of CBS video programming online. I also drool over the portfolio of domain names that CBS is acquiring as part of this transaction, such as TV.com, Radio.com, Search.com, Community.com, News.com, Download.com, MP3.com and many others. I hope CBS employs innovative talent who can effectively leverage these assets. However, it surprises me that Yahoo was not the purchaser, as CNET appears to be a much better fit for the Yahoo model.

Comcast has agreed to purchase Plaxo, an address book and social networking site, for a purchase price estimated at $150 million to $175 million. I’m afraid this might become a “me-to” purchase that Comcast will regret, following all the hype of other social networking acquisitions. However, I could be dead wrong if Comcast figures out a way to use this acquisition as a springboard to mesh Web 2.0 with cable television.

Ask.com (owned by IAC/InterActive Corp) has agreed to purchase Lexico Publishing, the owner of Dictionary.com, Thesaurus.com and Reference.com for an undisclosed, all-cash amount. I like this acquisition which seems to be aligned with the Ask.com recent strategy to focus more on answering questions, in an effort to differentiate itself from Google and other search engines. Ask is claiming that this purchase will make it the 9th most visited property online, ahead of Facebook.

HP, the largest computer maker, is in talks to buy EDS, the IT services provider founded by Ross Perot, for $12 billion to $13 billion. This acquisition would allow HP the footing to better compete with IBM for business customers. This acquisition fits with the recent HP strategy of becoming more of a solutions provider and less of a technology provider, and is a smart diversification with the recent struggles of computer makers.

It’s interesting to see how this trend of technology acquisitions ebbs and flows. Right now it appears the money is flowing.

I would personally love to see Disney purchase the Star Wars franchise. I think Disney could develop large sections of their theme parks with Star Wars rides, develop star wars cartoons for the Disney Channel, put out Star Wars movies every few years, like the James Bond franchise. I also think Disney should purchase Build-a-Bear as a marketing channel for their stuffed animated characters, and use the Build-a-Bear virtual world as a spring board to develop a similar virtual world for Disney characters. What internet/technology/media acquisitions would you like to see?

This new feature is powered by FeedBurner and only took a few minutes to implement. Not only does this service send my subscribers updates via email, but it also provides many other services to monetize and promote my blog. Last year Google purchased FeedBurner for a rumored price of $100 million, although Google will not confirm the price. This is another great example of the many free services which Google provides to small businesses for free. See my recent blog on this topic.

FeedBurner is the leading provider of media distribution and audience engagement services for blogs and RSS feeds.  FeedBurner tools help bloggers, podcasters and commercial publishers promote, deliver and profit from their content on the Web.

• According to Nielsen/NetRatings, FeedBurner is growing faster than MySpace and Digg with 385% traffic growth.
• Total feeds: 1,507,966
• Number of publishers: 846,311
• Number of podcast and videocast feeds: 207,436

Google was visionary with this acquisition, jumping in as a market leader in feed-based advertising. This is a newer type of advertising which attaches contextual advertising to email and RSS feeds. Google can afford to give away this amazing service for free because it hopes the feed owners will choose to use Google Adsense to monetize their feeds, which can now be conveniently done in FeedBurner, with the click of a button.

Some of the highlighted concepts from the first week of my MBA courses included:

(1) Don’t hire anyone you can’t fire. Charity does not tolerate poor performance. When employees feel they cannot be fired, their performances drop and it does a disservice to them and the company.

(2) Opportunities multiply as they are seized. In my life, when I jump through one window that has opened another series of opportunities presents itself.

(3) Be Fair, but have the intestinal fortitude to make the tough decisions. Many companies allow themselves to be run into bankruptcy because they are not able to make the tough decisions, such as cutting staff and raising prices when necessary. When companies reach bankruptcy, a turnaround expert comes in and takes those difficult courses of action. If the bankrupt companies could have chosen to take those actions themselves they may have avoided bankruptcy. So, as business owners, we need to be willing to make the difficult decisions ourselves. If we can’t make these difficult decisions ourselves, we should get out of business. However, if those difficult decisions, such as letting staff go, ever cease to be painful, we should also get out of business.

(4) Don’t do anything stupid. This was a famous quote by the CEO of a company that was embroiled in accounting scandal. I originally felt that this quote referred to his desire to keep everything legal. However, it clearly became evident that this quote was iconic because the CEO and his team were consistently pushing the boundaries of ethics and this statement created a “moral ambiguity” under which ethical and legal lines were crossed.

This quote took on much more meaning on Friday, when we went to Aspen Grove to participate in team building activities that taught us business principles. Our guide for the day took us to two railroad ties that were about 15 feet apart. A rope hung down in the middle but was too far away to reach. Our group had to get across the gap between the railroad ties. To complicate the situation, many of the team members were given disabilities. For example, one of the team members had no arms. So, one of our group members created a lasso with belts and a shoe tied to the end, and lassoed the rope. Then, after a few members had crossed the chasm, we tied a loop in the rope hoping that the member of our group who was not able to use his arms would be able to sit in the rope loop. However, the rope was so high that it was very difficult to lift him into a sitting position.  The “disabled” group member had only his feet in the loop as we were struggling, and he finally asked us to just let him swing. The entire group filled with laughter, because we could see what he could not… His head would have hit the railroad tie if we had let him swing. The point of these two examples is that we need to be sure there is no ambiguity between what is right and wrong so that we don’t do something stupid, and we don’t let others around us swing into that railroad tie.