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9 Feb

Averting Stock Market Freefall. A study on CSOD

By Jason Ciment (co-founder LA Dezign)

When is a stock in freefall like a poorly planned website promotion strategy?

The last few weeks have seen a frightening reality in the stock market as the once high flying cloud-based talent management software company CSOD has seen its stock price plummet from over $61 to under $40 this week. And if you look at the news on the stock you simply see stock pundits and news agencies just reporting on the drop in the price after the fact but without any intelligence or guidance behind their words.

My company offers search engine optimization marketing strategies to many different types of professional and healthcare services and manufacturing companies. The first thing I do when I want to learn about something is I go to Google or Bing and I type in a search word or phrase to see “what’s up” for that industry. And if it is a stock I want to learn more about then I go to the search engines and look to see what sites the search engines lists in the results that will contain useful information for me.

So in my search engine query I didn’t find much recent news to explain this calamitous drop. It’s fascinating to me that top rated sites like Nasdaq’s own Nasdaq.com, or SeekingAlpha.com and The Street are just silent the last 2 weeks since the mudslide of their stock price started and yet this company which set the record as the top exit in Los Angeles history is producing no followup words of wisdom from the sages of Wall Street.

Look at this article from March 21st which features the legendary Jim Cramer from TheStreet.com where he recommends Cornerstone. http://www.thestreet.com/story/12538773/1/cramer-salesforcecom-crm-google-goog-workday-wday-cornerstone-ondemand-csod-all-good-buys.html

Cramer says Workday and Cornerstone are at the heart of this “holy trinity” of tech stocks and they should be embraced. Look at this video to see more on this recommendation from less than 3 weeks ago.

http://www.thestreet.com/video/12537954.html

So my question is where the heck is Jim Cramer now that the stock is in freefall? Why hasn’t he written anything? Doesn’t he care that his recommendation has caused his followers to blow a wad of cash on a failed investment as of today’s pricing?

Now what’s interesting is that I am a fan of this company in a big way. Cloud computing is the holy grail of printing money in today’s Google economy. There’s no hard cost that other businesses face such as putting a product into inventory and having supply chain management challenges. Clients in the cloud pay monthly fees for access to information that floats practically freely over the Internet highway. Sure there’s a cost of programming and network maintenance but ultimately that is a fixed cost that can be spread amongst so many clients that the true profitability of a cloud based software company is seriously and possibly staggering.

Granted the dollars to be spent “ramping up” and signing on clients is also monumental. But once you have a client – and this company signs up clients at a ridonculous rate of success – in this industry you tend to keep them for far more than the initial 3 year contracts I believe. The cost of switching is far more painful than the old CALL MCI commercials of days old when you wanted people to switch from ATT.

So why did I start this article comparing it to a poorly designed website marketing campaign? Well considering how our company spends the majority of its time positioning our clients to show up on top of Google, CSOD is failing to position itself appropriately on the search engines – which might have staunched the price freefall in part.

The first thing people do when a stock is in freefall is they go to Google and they type in the stock ticker with the word news. I am of course conceding that the really first word they type is the stock ticker and the word “quote” to follow. But if the stock is in freefall or really volatile in the short term, then we are past that point and people are looking for information to assuage their fears or stoke their interest in doubling or averaging down – or selling if they want to book some profits or avoid more losses.

What CSOD should have been engaged with since embracing success – especially with its IPO – was a brand positioning strategy that would lock up many of the first page listings on the Google and Bing search results. Of course CSOD is a public company and its ability to disseminate information is regulated. So there are ways to work within those rules and confines and still produce a quality engagement that captures the interest of the investing public and institutional minds too.

Now it’s almost too late for CSOD to recover from this latest situation. There’s just going to be much traction now from the Wall Street megaphones once they realize they made recommendations that are killing their followers’ portfolios. So of course they will come out with all these “long-term” approach qualifications and suggest “now is a really good time to buy in”. That’s how the game works. it’s fine as long as you know the rules.

So what are my recommendations for companies like CSOD who should beef up their game online?

1. Open a YouTube Channel and promote videos. There are very many video interviews or tapings of speaking engagements. Get them publicized. 2. Get a media center going if only to release very public information on a daily basis just so they monopolize the news. And get these releases syndicated and optimized. 3. Promote the social media channels of Facebook and Twitter to ensure that there is an ongoing flood of user generated content. Talk about the wonderful place to work that CSOD is and let the feelings about the company trump the lack of any news which is how the short sellers are pushing the stock down. 4. Build a few alternate web presence channels (ie. other website domains) that target specific niches like www.CSODnews.com and get those ranked – with public info as well of course.

I am not suggesting anything shady. Just good business practices that could be implement on your own. These are just a few suggestions in the short term that any company can apply quite easily. They don’t even need to hire LA Dezign unless they come to the conclusion that it’s better to outsource even these fairly mundane seeming tasks to a Company that does this all day long.

P.S. I am not selling this week. Still a fan.

About Jason Ciment

Jason Ciment has been involved commercial with the Web since 1997. His numerous columns on website marketing have appeared on websites such as www.Clickz.com and www.searchengineland.com. His book on search engine optimization can be found at www.seotimetable.com. This blog covers web design and SEO tips and tips and advice for working more efficiently and enjoyably.

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