Thursday

How Being “Friends” On Google+ Leads To Better Rankings through Social Search

Want to rank better on Google? Get people to add you to their Google+ Circles, and that seems to be a potentially huge boost, based on a search I just did.

I’m Friends With Ford

When I looked for cars about an hour ago, I found a listing for Ford at the bottom of the first page of results, in the 10th position. In addition, there was an enhancement telling me that Ford had shared this link:

Interesting. Why is Ford showing up and with that enhancement in my results? Hovering my mouse over the Ford Motor Company link displayed this:

Indeed, I am connected to Ford through Google Plus. Ford is one of the very few brands that Google has allowed to maintain a brand page on the new Google social network. That connection is allowing Ford to rank better in my search results.

Content From Friends Has Long Ranked Better

In many ways, there’s nothing new here. Google’s Social Search results have, since October 2009, allowed content from people you know to rank higher, if you’re logged in.

That’s what’s happening here. I “know” Ford, which is why Ford’s page is showing up in the top results. When I’m logged out, and Google can’t tell that I know Ford, the page doesn’t appear in the first 50 search results that I reviewed, which means it’s effectively invisible.

Side Note: Social Search Seems Sort Of Screwy

As an aside, Google Social Search’s connections seem to be radically screwed up, at the moment. Consider:

In the first example, you can see that I’m told that Jason Kincaid shared a link, but then I’m also told he’s Michael Arrington. In the second, Matt Cutts is also apparently Google Webmaster Central. My favorite, found by Andrew Bleakley, is where David Harris is apparently me.

I think what’s happening is that the indirect “friend of a friend” connections are being shown. I might be connected to Mike from TechCrunch, which is why I see in turn something Jason shared, for example. Or maybe things are just broken.

Brands Are Newish To Social Search

Back to the Ford result. Why did it surprise me so much to see it today, when Google Social Search has long worked to boost content from your social connections?

Until recently, the social connections that Google Social Search uses have been mostly actual people. While brands were allowed to have Google Profiles until March of this year, few of them did. That meant relatively few brands were available for direct connections through Google.

It was possible to connect with brands in Google Social Search if you followed brand profiles on Twitter, Facebook or some other ways. However, it was fairly unusual for me to spot that something was getting a boost in Google’s search results through that type of connection.

Coming: The Google+ Brand Boost

Bottom line: being a brand on Google+ will mean people can make a direct connection to you, and that’s going to result in an increased chance that you’ll rank better for those people, when they’re logged in.

Of course, right now you can’t be a brand on Google Plus. Only a tiny number of brands are being accepted, with the promise that everyone will be allowed to have brand pages around the third quarter of this year.

I’ve asked Google three times for a list of all the approved brands in Google Plus. So far, it still hasn’t provided one. But Ford carries a big “Test Account” label like this:

If you see a brand with “Test Account” label on it, then it’s likely part of the program. If not, then it’s likely hoping to stay under the radar but might get pulled at any time.

While Brands Wait, The +1 Button

While brands can’t be part of Google+, they can take part in the entirely separate Google +1 program, which allows for anyone — even if they’re not in Google+ — to indicate that they like a page directly to Google.

Google has previously said that gaining +1s can help improve your ranking for those who have directly +1ed your content, as well as for those they are connected to. In addition, it can show even those who aren’t connected or using +1 an overall count for your page, should it appear for them naturally.

About The Author: Danny Sullivan is editor-in-chief of Search Engine Land. He’s a widely cited authority on search engines and search marketing issues who has covered the space since 1996. Danny also oversees Search Engine Land’s SMX: Search Marketing Expo conference series. He maintains a personal blog called Daggle (and maintains his disclosures page there). He can be found on Facebook, Google + and microblogs on Twitter as @dannysullivan. See more articles by Danny Sullivan

 

Wednesday

3 Reasons Why a Social Media Marketing Strategy is Absent from Most Companies

In a recent post from eMarketer.com  “Executives Fail to Focus on Social Media Marketing Strategy”, some interesting findings show that while companies believe the future of their company is related to their use of Social Media, most are not making it a priority.  While the stats make for an interesting dialog, I don’t find this surprising due the transition period of acceptance and saturation we are still in, this naturally will lead to a low level of action taken.  With that said, I believe there are three main reasons that are attributing to a much slower social media strategy adoption rate among executives.

1. Some executives give social media lip service, but really don’t believe it works

I think for the past few years we have seen the age divide of social media being accepted close, but for some in business social media has become a buzz word that gets spoken in circles to make you sound relevant and not much more happens past that. Studies have shown that while usage of social networks among middle age people have increased, there is still hesitancy to see value of its use in business. This maybe due to the elusive ROI that most companies want to see happen “yesterday”, however we in social media know that in this channel, it can be a long process before large enough returns are seen to make those in the “C” Level happy. As companies add more and more social savvy talent, I think this reason will disappear, unfortunately some will wait until its to late only to realize their market share was stripped out from underneath them.

2. Social Media Marketing costs time & money

Yes, you would think this would not be an issue for some mid to large companies, but speaking from a recent experience, the bottom line drives corporate america. Sure you can wave the “social Media is the future” banner and show that the President of the United States, Lady Gaga & Donald Trump are all on Twitter, but that is so far removed from the board rooms the average company.

Most companies don’t know where to start, some think all they have to do is post a new status update on Facebook everyday, then they become disillusioned when they only get 3 “likes” and 1 optin on their mailing list for the month. Then in a pool of “social media experts”  all claiming to have the magic formula that will solve there problems, they give one a try and get burned, mainly because the expectations set up front on both sides were completely wrong, not to mention the “strategy” wasn’t a strategy, it was some theory drawn on a napkin at Starbucks.  Not that I have anything against theory’s drawn on napkins at Starbucks, but a good social media strategy will take up more space than a napkin, it will cost more that a box of napkins. It takes lots of time, lots of energy and lots of money. The reason? Because social media marketing is about and involves people. Good relationships don’t happen over night, to build them it takes building trust and likability, both of which are tough to make a graph for so you can demonstrate ROI at the next board meeting.  The fact is a lot of people don’t know how to build solid relationships in person, let alone online, so coming up for a strategy for social media gets moved on the list of priorities.

3. Company bottom lines are not effected enough to justify a change in course

While the time & money reason is an important one, I believe this reason is bigger than many realize. It mainly is a reason used by those who hate change, who like to live in the “this is how we’ve always done it” world.  These are the people who still haven’t updated their 5 page website since 1998, still have the fake fica tree collecting dust in the reception area and still buy the large ad in the Yellow Pages book. (which no one reads by the way).  The only thing that will get the attention of these executives are when market share and profits are dwindling and even then their actions will still not involve social media strategy, but will involve placing a larger Yellow Page ad, cutting sales executives & budgets and removing reserved parking places, you know the stuff that really helps companies grow.

I hope you can see my humor and sarcasm coming through, but it is true and by then it will be too late.  Those who “get it” will be replacing people at your competition and will be doing business with social currency through online networks and relationships, if you are not there, I believe no amount of Yellow Page ads and refrigerator calendar magnets will save you.

I believe all three reasons above attribute to not only a lack of social media strategy, but poorly executed social media policies in many companies. If executives and can’t overcome these hurdles, I agree with the conclusion in the eMarketer post:

“Many companies may be using social media marketing, but those that choose not to focus on a social strategy risk falling behind the curve in integrating social media with their overall marketing goals. Recognizing the importance of strategy alone isn’t enough; companies should start implementing a plan.”

Small business can turn on a dime. Don't miss your opportunities to think like the big guys, and take the leap!

Friday

Valuable Feature: Google Using Data to Protect Online Users from Malware

Originally posted on Google Online Security Blog

The Internet brings remarkable benefits to society. Unfortunately, some people use it for harm and their own gain at the expense of others. We believe in the power of the web and information, and we work every day to detect potential abuse of our services and ward off attacks.

As we work to protect our users and their information, we sometimes discover unusual patterns of activity. Recently, we found some unusual search traffic while performing routine maintenance on one of our data centers. After collaborating with security engineers at several companies that were sending this modified traffic, we determined that the computers exhibiting this behavior were infected with a particular strain of malicious software, or “malware.” As a result of this discovery, today some people will see a prominent notification at the top of their Google web search results:

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This particular malware causes infected computers to send traffic to Google through a small number of intermediary servers called “proxies.” We hope that by taking steps to notify users whose traffic is coming through these proxies, we can help them update their antivirus software and remove the infections.

We hope to use the knowledge we’ve gathered to assist as many people as possible. In case our notice doesn’t reach everyone directly, you can run a system scan on your computer yourself by following the steps in our Help Center article.

More Notes from Google:
  • The malware appears to have gotten onto users' computers from one of roughly a hundred variants of fake antivirus, or "fake AV" software that has been in circulation for a while. We aren't aware of a common name for the malware.
  • We believe a couple million machines are affected by this malware.
  • We've heard from a number of you that you're thinking about the potential for an attacker to copy our notice and attempt to point users to a dangerous site instead. It's a good security practice to be cautious about the links you click, so the spirit of those comments is spot-on. We thought about this, too, which is why the notice appears only at the top of our search results page. Falsifying the message on this page would require prior compromise of that computer, so the notice is not a risk to additional users.
  • In the meantime, we've been able to successfully warn hundreds of thousands of users that their computer is infected. These are people who otherwise may never have known.

 

Tuesday

Interesting Point of View: Twitter Spam and Motivation to Report it

Point of view from Marco Arment

I don’t know how Twitter handles spam internally. They’re probably devoting a lot of time to fighting it.

But I don’t think it’s unreasonable to observe so much repetition in the still-visible spam techniques and conclude that Twitter is being extremely conservative about deploying automated heuristics, relying heavily on the “Report Spam” feature instead.

Spam-fighting is always a tricky balance: if it’s too aggressive and automated, it’ll prevent some legitimate messages from reaching their recipients. But if it’s too conservative or manually triggered by user reports, a lot of spam will get through.

The operators of spammable services need to decide where their priorities are on that spectrum: severely annoy a small number of your users by not delivering some legitimate messages, or moderately annoy a large number of your users by showing them too much spam.

Twitter seems to have chosen the latter. At this point, given their resources, it’s almost certainly a philosophical choice — e.g. “every message must be delivered” — and not because of a lack of spam-fighting abilities.

There are three big problems with this approach:

  • A lot of spam is shown to users before it’s cleared away by the few that report it (and whatever actions result from that). The spam succeeds. And if only, say, 1 in 100 people report spam that they’re shown, the spam is annoying quite a lot of users before anything is done about it.
  • It appears to users that the service is taking a passive, almost neglectful approach to spam, which diminishes the motivation to use that “Report Spam” button. If the ratio of spam views to reports gets worse — say, if only 1 in 500 people report it — then spam starts to anger even more users before anything is done about it.
  • Report-and-respond-later systems are far less effective when the barrier to posting new spam is extremely low. In Twitter’s case, who cares if they ban a spam account after it has spammed 500 users, if the spammer has hundreds or thousands of other accounts that it can keep creating at nearly zero cost?

Fundamentally, I believe Twitter’s priorities here are wrong. Twitter needs a far more aggressive, automated, proactive, heuristic-based anti-spam system. And if someone has trouble legitimately tweeting a link with no text to 100 people in a row who don’t follow them at precise 1-minute intervals, that’s just the price we’ll have to pay.

In the meantime, I’m never using the “Report Spam” feature again, because it just seems like I’m wasting my time.

I have to admit, I still report Twitter spam, but it does seem like it's increasing. Doesn't that happen with each Social Media platform we see? What do you think?

Sunday

Infographic: Is Social Media A Viable Customer Service Channel? #custserv

You have a customer service issue. Should you go to the company website? Call their toll-free number (if they actually even have one)? Post a message on their Facebook page? All of the above? And on the flip side, if you're the company, how do you track and manage touch points with customers across an ever growing number of sources?

To find out, the folks over at ClickFox, a company specializing in customer experience analytics, conducted a survey to assess the potential cost savings from addressing customer service issues via social media, the impact of word of mouth influence in the social sphere, and the degree to which customers understand the tools currently available to them.

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They found 40.2% of customers who weren't able to get their issues resolved in a timely manner via social media then resorted to calling the company's toll-free number. ClickFox estimates each phone call to customer service can cost companies $15 or more--avoidable costs that can directly impact a company's bottom line.

It will probably come as no surprise, but word of mouth was HUGE. 96.5% of customers indicated they were "somewhat influenced" to "very influenced" by other customers' comments about companies. That means only 3.5% responded that they were "not at all influenced" by customer comments. As the social commerce market continues to grow, the role of consumer reviews and comments will become an increasingly important factor when making buying decisions.

"Companies must figure out a way to incorporate social channels into a total customer service solution that they can manage throughout the complete lifecycle of the customer" says Amir Dekel, director of product marketing and communications at ClickFox. "They need to be able to capture what happens during every interaction--to create a link between an anonymous Twitter user and their CRM system" Dekel added.

Read more at fastcompany

via fastcompany.com

Saturday

Science of Customer Service: Data Proves Faster Response Means Happier Customers #custserv

People are constantly chasing the question “how do I make my customers happy?”. There’s a lot of suggestions out there. We’ve covered many of them.
product screenshot

But what actually works?

We dug into tens of thousands of tickets in our UserVoice Helpdesk system and researched some of the actions that demonstrably made customers happier. Today we’re going to cover speed.

Fact #1: People like to hear from companies quickly

There’s nothing more frustrating than having an issue and waiting, waiting, waiting to hear from a company. And the numbers prove it: 25% of kudos were given to responses that came within 15 minutes!

Fact #2: People like to have their issues resolved quickly

In our research, we found that 46% percent of kudos were given after just one admin response. People also want their issues solved quickly, not over the course of many messages.

Fact #3: Quality is most important

Despite the numbers above, we still saw large numbers of kudos for issues answered more than two hours later and involving more than 5 messages. Why? Because people want the right answer, not just the quick answer.

So what are the action items for your organization? Work hard to increase your response time, but also focus on accurate solutions in your first message.

Hat Tip to my buddy, Evan Hamilton of UserVoice for these quick tips!

Thursday

How Millennials impact Boomer Spending: There Are Huge and Odd Impacts

We talk a lot about the impact of millennials living at home with their parents and what that means for the upcoming generation. Stats vary, but somewhere between one in 10 and three in 10 seems to be a good guess for how big of a population we're looking at, although we've seen stats of up to 85% of graduating college seniors planning to move back home.
Some of these so-called Boomerangs are saving money by not renting, but many more just don't have any money to save because the unemployment rates are so high for people in their 20s -- almost 15% for those aged 20-24.
But we don't talk a lot about what it does to the spending habits of their boomer parents. Turns out, in some cases there are huge and odd impacts.
The chart below illustrates some data from Experian about differences in boomer households where the kids have flown the nest and those where the birds have returned to roost.
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The findings also showed that these boomers are also more likely to be still shopping for their kids. Retailers such as American Eagle Outfitters, Banana Republic and Express are still popular with boomers whose kids live at home, despite being more directly targeted to those kids themselves.
Maybe boomers are not doing the economy any good by housing their millennials

Wednesday

Food For Thought: Do You Have Time for Social Networking? Economize Time by Planning Ahead

 Laura Stack - The Productivity Pro

“Social media isn’t the end-all-be-all, but it offers marketers unparalleled opportunity to participate in relevant ways. It also provides a launch-pad for other marketing tactics. Social media is not an island. It’s a high-power engine on the larger marketing ship.”Matt Dickman, American marketer and blogger.

“Networking is not about hunting. It is about farming. It’s about cultivating relationships.”Dr. Ivan Misner, American author.

“The most successful marketer becomes part of the lives of their followers. They follow back. They wish happy birthday. They handle problems their customers have with products or service. They grow their businesses and brands by involving themselves in their own communities.”Marsha Collier, American speaker and business author.

Networking—the development and maintenance of beneficial relationships between likeminded individuals—is an important means of maximizing success and productivity at all professional levels. Among other things, it can:

• Help businesses find, make, and close deals.
• Provide a resource for companies to locate talent.
• Make it easier for individuals to find jobs.
• Connect collaborators and joint venture partners.
• Boost marketing efforts in a way that’s both easy and cost-effective.

Networking is a basic human habit that’s been with us since prehistory, but the evolution of the World Wide Web has transformed it into something uniquely widespread, if not unprecedented. Facebook, the premier online social network, claims over 300 million members these days—not much less than the population of the United States. It’s an order of magnitude easier than it’s ever been to stay in contact with people, even if you never see them face-to-face or ever speak to them directly.

It’s no wonder that the business world has latched onto the potential offered by the online social networking sphere, advancing corporate agendas not just on generalized communities like Facebook and Twitter, but on specialized business communities like LinkedIn and VisiblePath as well.

From a business perspective, I believe that participation in social networks can be well worth the time required to cultivate the relationships it offers, especially if you’re an independent entrepreneur. The operative word here is “can.” First of all, you have to choose your venues wisely, and do your best to separate your business efforts from personal interactions. They can intersect to some extent, but don’t ever let the purely social overwhelm the professional. Otherwise, you may end up wasting your time on efforts that do nothing to help you professionally. This can absolutely kill your productivity.

I’m not saying that you should completely avoid non-professional networking sites; in fact, I find Twitter especially useful for keeping in touch with my network and for sharing information. Furthermore, depending on your business plan, Facebook et al. are excellent venues for marketing directly to specific consumer groups. However, LinkedIn and similar business-oriented communities are your best bets for profitable, productive social networking if you’re looking to accomplish most of the goals I outlined at the beginning of this blog entry. After all, that’s what they were designed for.

And don’t forget, with this type of business network, you’ve got a knowledge base composed of literally millions of professionals of all kinds. One thing I’ve recently taken advantage of on LinkedIn is their poll feature; in fact, last time I blogged about the results of my recent poll, “During which period of the day do you feel most productive?”

Which brings up another point: blogging. It’s not networking as such (at least not in the sense of Facebook or LinkedIn), but blogging is a valid and valuable form of social media. Maintaining a regular blog is a great way to attract attention, get your ideas out there, and, ultimately, develop long-term business relationships that profit all parties involved. People are hungry for information in their fields of interest, and more and more, they’re looking for it online because of its ease of availability. What a great way to connect with others, if you’re serious and willing to put a little effort into it!

I’ve already mentioned that you must choose your networking venues wisely, so that they’ll profit rather than distract you, but let me list a few other caveats. Most importantly, I think, you have to be willing to invest the time necessary to make it all work. For example, on your own pages you need to:

• Regularly create and upload content.
• Respond to posts quickly and constructively.
• Congratulate your contacts on birthdays, anniversaries, promotions, and the like.
• Post polls and surveys and take the responses seriously.

In addition, frequent other people’s pages so you can bring yourself to their attention:

• Ask questions—and provide answers.
• Share your experience.
• Post your opinions.
• Respond to their surveys and polls.
• Invite them to visit your pages.
• Leave your own links behind.

All this will take a minimum of 3-4 hours a week to do properly, depending on the number of social networks you work with. If you can’t handle it yourself, delegate it.

To minimize of your SM time expenditure:

• Focus tightly on what you want to accomplish with your SM, and put strategies in place to achieve those goals.
• Schedule a regular time to work on SM, and stick to it. Stop when it’s time to stop.
• Turn off your email alerts and similar distractions.
• Use other technology to make life easier; for example, you can monitor SM sites like Twitter, Facebook, and LinkedIn with a simple program like Tweetdeck.
• Use automatic scheduling features to post content, as I’ve done on Twitter with my productivity tips.

One more thing: beware of Obsessive-Compulsive Social Media Disorder, which I’ve blogged about before. It’s easy to fall into the habit of compulsively checking SM pages and obsessively posting when you should be doing something else. Fight this tendency. There are very few things on any social networking site that require your immediate attention.

To answer the question headlining this blog: Yes, I think you do have time for social networking, and in fact you should make time for it—but only if you’re determined to use it correctly. Remember: social networking is a tool, just like your Blackberry or iPad, so use it as such. Don’t forget that it can take over your life and damage your productivity if you let it. But make it work for you, as I have, and the sky’s the limit!

 

Tuesday

Feeling a little abandoned by Amazon? Barnes & Noble is Courting Amazon Affiliates

With Amazon determined to avoid collecting sales tax in as many states as possible for as long as possible, Barnes & Noble issued an open letter to Amazon affiliates urging them to sign on to its affiliate program, which it says has over 13,000 members. As part of its strategy to limit the states where it collects sales tax, Amazon has ended affiliate programs in a few states that have passed legislation calling for all online retailers to collect sales tax from out-of-state e-tailers. 

“We understand that Amazon.com has threatened to terminate its affiliate program in certain states that may enact e-fairness legislation that requires Amazon to collect sales tax due on purchases by residents in those states.” the letter begins.”Barnes & Noble is disappointed to hear that Amazon would threaten small businesses’ livelihood rather than comply with state law.” In large part because its stores gives it “nexus” in all states, B&N already collects sales tax for both its bricks-and-mortar stores as well as its online business. “Barnes & Noble wants Amazon.com affiliates who have been terminated to know that you are welcome to join the Barnes & Noble affiliate family. If Amazon doesn’t want you, we do! And, we will take care of collecting and remitting all sales taxes due on BN.com sales to its customers so you and our customers don’t have to worry about being hassled or prosecuted by state tax auditors,” the letter, signed by John Foley, president of BN.com, said.

Barnes & Noble is one of the largest and most trusted brands on the Internet. Barnes & Noble.com is now an exclusive partner with the LinkShare network for their affiliate program.

Some details on the Barnes & Noble.com affiliate program:

  • 6% commission on millions of products.
  • Access to site-wide seasonal sales, coupon offers, and special deals.
  • Ability to promote NOOK reading devices.
  • Free shipping on orders of $25 or more.

Sunday

Do you know how to measure the return on your investments in social media? Here's a few solid tips

Do you know how to measure the return on your investments in social media? Every day we measure returns on our marketing investments. We create e-mail campaigns, attend trade shows, hire SEO consultants—and measure results. Social media are no different. Social media have many uses, including brand building and customer acquisition and support, all of which are of great importance. If you’re not measuring success, you won’t know whether you are wasting time and money.

Here are ways to measure returns on your social media efforts.

1. Don’t get trapped in jargon. Each social site is different. Facebook "likes" and Twitter followers are important numbers. But don’t just track those. Track business results. Did you generate leads? Traffic? Did you turn detractors into promoters?

2. Quality matters. Who are your Twitter followers? Are they relevant? Spammers? Lots of people may follow you quickly, wanting you to follow them. If someone looks irrelevant, you’re not obligated to follow back.

3. Measure the conversation. When was the last time you forwarded a vendor e-mail? Measure the rate of shares, "retweets," and comments as a way to gauge your reach.

4. Not all social media count. Not all sites are equal. Are there critical influencers in your market? Have you built relationships with them? Are you reaching out to Yelp commenters?

5. Know your visitors. Measure and score those who come to your site, and watch what they are doing. If you do this across all channels, you’ll know what’s working. If you do it right, social media will power your business to the next level, one customer at a time.

Brian Goffman
Co-Founder and CEO
Optify
Seattle

 

Saturday

Amazon Defies Law, Does Not Collect Sales Tax in California, Yet Dumps Affiliates

Amazon Box

So far, Amazon is thumbing its nose at the state of California, refusing to collect sales tax on purchases made by Californians.

According to the state law, however, designing its Kindle within California may cause it to pay taxes, even after the company terminated its agreements with its affiliates in the state.

California Gov. Jerry Brown passed a portion of the state budget on Wednesday night that would require Internet retailers with affiliates in the state of California to collect sales taxes from customers living there.

The so-called budget trailer bill, ABx1 28, was authored by Assemblymember Bob Blumenfield (D-San Fernando Valley) and took effect Friday, a spokesman for the California State Board of Equalization confirmed.

Amazon representatives could not be reached for comment on Thursday night. But the company said that it would not comply with the new law, in a statement sent to The New York Times.

"This legislation is counterproductive and will not cause our retail business to collect sales tax for the state," Mary Osako, an Amazon spokeswoman, said in an e-mail.

It's true, however, that Amazon is not collecting the tax. PCMag.com purchased a pair of MP3s from Amazon on Friday - one, via a virtual private network (VPN) connection to the company's New York headquarters, and a second from a cable modem physically located in California. Amazon did not charge sales tax for either purchase.

By law, those MP3s are subject to the state's "use tax," which essentially applies sales tax to purchases made from out of state, including Web merchants. But those taxes are rarely collected, prompting California's new law.

As a result of the new law, Amazon terminated its relationships with California affiliates this week. "We oppose this bill because it is unconstitutional and counterproductive," the company said in a letter. "It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action."

The tax process

According to Anita Gore, deputy director of external affairs at the BOE, the law requires a company doing business in California to register with the state and file a quarterly tax return.

The third quarter began Friday, covering the period through September; about a month later, "we'll have an idea what compliance will be," Gore said.

Thirty days after that, the state will send a delinquency notice to any companies that do not comply with the law. The state can also perform its own audit and determine what tax, if any, is owed. If a company does not file with the state, it can be charged a 10 percent penalty and interest on that, Gore added.

Companies can appeal the process through a series of hearings with the BOE. That process can last up to a year or more, Gore said, then go to court. If a company wants to expedite the process, it can pay its tax, then ask for a refund. If denied, that company could also sue.

By law, the state posts a list of the individuals and companies with the highest tax delinquencies every quarter, over $100,000, as a "name and shame" strategy.

"Since the inception of this program, the Board of Equalization has received a total of $5.1 million from 36 qualifying taxpayers that came forward to take care of their debts: 25 through installment payment agreements and 11 by making payment in full," the BOE notes.

Why Amazon might be liable

On Friday, the state BOE posted a special notice explaining the new rules for companies doing business in California. There's a key clause:

"Any retailer that is a member of a commonly-controlled group and is a member of a combined reporting group that includes another member of the retailer's commonly controlled group that, pursuant to an agreement with or in cooperation with the retailer, performs services in this state in connection with tangible personal property to be sold by the retailer, including, but not limited to, design and development of tangible personal property sold by the retailer, or the solicitation of sales of tangible personal property on behalf of the retailer."

Amazon houses Lab126, which works on its Kindle readers, in California. On the bottom of the company's "About" page, there is a statement: "Lab126, part of the Amazon.com, Inc. group of companies." The "Contact" page lists an address in Cupertino, Calif.

Although Gore declined to comment on Amazon specifically, she confirmed that any company who housed a design operation - the "design and development of tangible personal property" - would be defined as a nexus, the definition that triggers the new tax law.

Editor's Note: This story was updated at 5:35 PM PT on July 1.

For more from Mark, follow him on Twitter @MarkHachman.

 

 

Friday

California Tax Ploy: Amazon affiliates are the victims, other web brands offer alternatives

Beginning today, Amazon.com is supposed to start collecting sales tax on goods it sells in California.

So are Overstock.com and other out-of-state online retailers and catalog houses doing business here. Ready or not, like it or not, it's now the law.

First payments will be due by the end of October, 30 days after the close of the third quarter, according to the State Board of Equalization, the state agency in charge of implementing the "e-fairness" law.

Amazon and Overstock, which announced they have cut off their California affiliates, are by no means alone. Approximately 2,000 letters and questionnaires are to be sent to individual out-of-state online retailers nationwide, to ascertain whether they fit the criteria outlined in the law.

The process will take some time, board officials said - they've been given a meager $1,000 out of the general fund to get the law up and running - but suggest companies start collecting now to meet their October bill.

"Any retailer that falls under the new criteria should begin collecting the (sales) tax as of July 1," spokeswoman Anita Gore said.  

 According to the law, an out-of-state online retailer with any kind of "nexus" in the state - a physical or corporate presence, not just a brick-and-mortar retail outlet - is liable. With one exception: retailers who have sold no more than $500,000 worth of goods in California in the previous 12 months. (Full text of the law, ABX1 28, at sfg.ly/kkSCkM.)

The concession was aimed primarily at San Jose's eBay, a strong opponent of all such online tax proposals, saying they hurt the company's "business model," which relies on individuals and small businesses selling stuff on their auction site. Ebay initially pushed for an exemption of $2 million.

In a statement Thursday, an eBay vice president, Tod Cohen, said, "We believe this exclusion covers the vast majority of all eBay sellers." But his statement added that eBay "is committed to protecting all sellers from unconstitutional sales tax laws."

Unclear on the concept: Apart from calling it "counterproductive," the law apparently "will not cause our retail business to collect sales tax for the state," according to Paul Misener, Amazon's vice president for global public policy.

Perhaps Misener believes tossing 25,000 heretofore loyal California "associates" over the side is enough to do the trick. Or, maybe he's not aware of that part of the law referring to any entity "that - either by itself or through a subsidiary (in California) - designs or develops products sold by the retailer."

On Amazon's corporate website, under "United States Subsidiaries," we find four California locations for A2Z Development Center Inc. - "an innovative customer-centric software development company" - including in San Francisco and Cupertino, where the Kindle was developed; a search engine technology company called A9.com in Palo Alto; and, in San Francisco, Alexa, another Amazon search company.

We don't know whether Amazon intends to close them down, or move them out of state - it didn't respond to a request for comment about its intentions toward the law, for example, whether it will be setting sales tax money aside beginning today.

Assurances: The real victims, so far, are Amazon's and Overstock's affiliates.

Utah's Overstock wouldn't say how many of them there are in California, except they number "in the hundreds." One wonders what Alameda County officials, who sold the naming rights to the Oakland Coliseum (now O.co Coliseum) for a song, are thinking about that.

According to Amazon's Dear John e-mail sent out Wednesday, "As of the termination date, California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com, MYHABIT.COM or SmallParts.com."

But it goes on to assure the affiliates, "all qualifying advertising fees earned on or before the termination date will be processed and paid in full in accordance with the regular payment schedule."

Amazon and Overstock affiliates looking for alternatives might heed the advice of Board of Equalization member and former Chairwoman Betty Yee: "Other major retailers such as Sears, Barnes & Noble, Best Buy and Walmart have all extended invitations for these affiliates to join their network programs," she said in a statement Thursday.

Yee could have added Target, which has also opened its arms to those being spurned. Expect to see more invitations and full-page ads from these and other retailers in the near future.

Other options: Some affiliates are calling for more direct action. San Francisco writer and best-selling author Michelle Richmond is calling on fellow members of Word of Mouth Bay Area, a writers group, to delete Amazon links from their websites.

Said her e-mail to the group: "Amazon needs to know that the people who write and sell books (not to mention music, movies, etc) don't (think) Amazon and other big internet retailers deserve the unfair edge they get by not taxing products sold online in other states."

 

This article appeared on page D - 1 of the San Francisco Chronicle