All that Flash

May 3rd, 2011

Flashy and Splashy Websites: Is it worth it?              

Website designers often employ technologies like Flash, JavaScript, Ajax, and Silverlight to make their sites attractive, fast, and easy to use.

While there are great reasons to use these technologies, they can create problems when it comes to search engine optimization (SEO). Web page content that’s wrapped in a fancy package can be difficult – or impossible – for a search engine to “see.” That means the search engine crawlers may have a hard time understanding what your page is about, and so may not index all your important pages.

The search engines may also find it difficult to follow any links – internal or external – you’ve placed in web page content rendered in Flash, Silverlight, or other technologies. That matters because search engines use your internal links to discover other pages on your site, to understand how pages on your site relate to each other, and to determine which pages on your website are more important than others.
Designers sometimes incorporate the search function for a website into their designs. That can be helpful for people, but it may pose problems for search engines trying to crawl your site. If pages on your site are accessible only from a search box, the search engine won’t be able to see those pages, because search engines don’t type keywords into search boxes to find relevant web pages.

Below I’ll tell you about some of the popular technologies for creating attractive, people-friendly web pages, describe the potential issues, and tell you how to avoid them.

JavaScript Menus

Web designers often use JavaScript to make navigation menus with special mouse-over effects, animated drop-downs and other interactive features. While these design innovations can be truly useful for human beings, they can also be a real problem for search engine crawlers.

Today, Google’s crawler – fondly known as Googlebot – can actually follow many links created in JavaScript. But it can’t follow all of them. And while Google is the dominant search engine, with about 70 percent of people using it, 30 percent of your potential customers are using a search engine other than Google. Those people are even less likely to see your JavaScript links. If your business depends on people coming to your site from search engines, saying that the bots can probably follow your JavaScript links is a bit like your boss saying your paycheck probably won’t bounce.

A CSS menu can do pretty much everything a JavaScript menu can do, and without any of the issues that cause problems for search engine crawlers. Don’t forget that mobile phones, tablets and the other small computers that are increasingly popular for surfing the Web also have problems displaying JavaScript, but do fine with CSS.

JavaScript Click-Tracking Links

People who are serious about tracking the business performance of their website use some form of analytics. Seeing how visitors get to your website, and where they go after they land on it, helps you understand how to turn more visitors into customers. 

Sometimes web developers use a single page with pre-set parameters to track clicks. The page captures the information about which links were clicked, and then redirects the web browser to the final page that will be shown to the person who’s surfing.

This is very similar to the Javascript click-tracking function, and sadly, it has similar effects when it comes to search engines. Even if the website developer does the redirect with a [Glossary/301-redirect|301], some of the goodness of that link is lost. I don’t recommend this approach.

Solution? Use a free click-tracking service like Google Analytics instead of click-tracking JavaScripts. Yes, Google Analytics uses JavaScript, but NOT in the links themselves.


Flash is an incredible technology that enables a richer user experience. Flash is often used for video, slideshows and interactive features on a website. However, search engines can’t “see” any content that’s rendered in Flash.

Many websites have everything in Flash. It can look great to human visitors, but to search engines, it looks like the website consists of a single web page – and one with very little content, at that. If the search engines think your entire site consists of a single page, they’ll think your site doesn’t have much useful content, and won’t rank your site high in search results.

Google has improved its crawler’s ability to “see” what’s in a Flash object, especially if the web designer has followed some fairly straightforward rules.

Still, it’s not certain that all text rendered in Flash will be accessible to Googlebot. At the risk of repeating myself, let me remind you that 30 percent of searchers don’t use Google. Do you really want to fence out a third of your potential customers?

Bottom line: Use Flash for decorative elements. Render your links and navigation menus in HTML, so search engine bots can see them.


This technology, created by Microsoft Corp., enables rich media experiences similar to what you can do with Flash. Googlebot has problems seeing the text and links in Silverlight.

Just as with Flash, you’re best advised to use Silverlight for decorative purposes, and use HTML to render links and navigation menus.

Band-Aid Solutions

Some web designers apply a Band-Aid solution to the problems caused by rendering navigation menus in JavaScript, Flash, Silverlight or Ajax. They’ll create an HTML sitemap with links to all the pages, and sometimes submit an XML sitemap to the search engines.

These sitemaps will, in fact, allow search engines to see all the pages on your site. However, the search engines still won’t be able to see how many pages on your site link to any given page. That’s important information – the number of internal links to a page tell search engines how important that page is.

If your main navigation menu is in HTML or CSS, and all your major pages have the same navigation menu, then all your important pages will be linked from many pages on your site. Minor pages on your site will have just one or two links from specific pages. The variation in the number of links to each page tells search engines very clearly which are the most important pages on your site.

If, on the other hand, your navigation menu is entirely in Flash or JavaScript, and you’ve got a sitemap as a Band-Aid solution, the only internal link to each major page that search engines can see will be from the sitemap. That gives each page on your site just one link, making it appear to a search engine bot that each page is as important as every other. That’s not accurate, and means that your most important pages won’t show up as high in search results as they should.

Google Webmaster Tools can tell you how many pages on your site link to any other page. Log in to Google Webmaster Tools, click on Your Site On The Web, then click Internal Links.

Pages Accessible Only by Forms

Some sites have pages that can be reached only by filling out a form. For instance, one of the largest automobile insurance companies in the world used to have a simple form on its home page that asked for your postal code. You’d fill that out, click on Submit, and be directed to the portion of the insurer’s site that dealt with your region.

It sounds logical, but search engine crawlers don’t type in postal codes, and they don’t click on Submit. To the search engines, this insurer’s site looked like just a single page – and a pretty boring one at that.

How much do you spend on Yellow Pages advertising each year? More important, are you getting your money’s worth?

January 24th, 2011

If you are not reviewing your Yellow Pages ad results on a regular basis, you may be tossing hard-earned dollars down the drain. Yellow Pages ads have a number of built-in limitations that may reduce the effectiveness of your advertising dollar and restrict your ability to reach new patients. These limitations include:

  • High cost. Depending on its size and location, a Yellow Pages ad can cost up to $20,000 per year. And you can easily spend another $5,000 designing a customized ad. At those rates, it takes a lot of customers just to break even on the cost of the ad. Plus, studies show that the phone directory companies continue to raise their fees far beyond current inflation rates. Read the rest of this entry »

How Google Handles Social Links

January 17th, 2011

“We do use Twitter and Facebook links in ranking as we always have in our web search rankings, but in addition we’re also trying to figure out a little bit about the reputation of an author or creator on Twitter or Facebook,” says Cutts. “I filmed a video back in May 2010 where I said that we didn’t use that as a signal, and at the time, we did not use that as a signal, but now, we’re taping this in December 2010, and we are using that as a signal.”

Now, this doesn’t mean that suddenly Twitter and Facebook links are the main ranking factor determining where your content is showing up in organic searches. If anything, Google seems to be tiptoeing into the waters in this area.

Read the rest of this entry »

Tips on making your website faster for search engines

December 20th, 2010

In the modern world of the web, it is important that you keep your website fast for your users to see and use. This is also true for search engines as Google is now going to take into consideration load times when indexing websites.
It can be very hard to make these web pages smaller and faster with clients requiring high resolution images/ graphics and dynamic effects such as videos and animations. There are however a number of things a web developer can do to make sure that the website is at optimum speed.

Image compression

It is important to make sure that any images used within the website are at their smallest file size without losing quality. There are many graphics programs out there that can help you to re-size your images so that they are smaller. It is also important to use the correct formats such as GIF and PNG.

Read the rest of this entry »

Does Google use data from social sites in ranking websites?

December 20th, 2010

We recently looked at how Google and Bing use links on Twitter and Facebook for organic ranking, following an informative piece from Danny Sullivan on the matter. Google’s Matt Cutts has now addressed the subject a bit more in a new video uploaded to Googles’ Webmaster Help Channel.

Read the rest of this entry »

Are Social Signals replacing PageRank in search importance?

December 18th, 2010

Microsoft  partners with Facebook to bring social relevance to its Bing search engine. This is a huge announcement  with deep implications for the future of search and whether Bing can make gains on Google. Microsoft is leveraging it’s ownership stake in Facebook to strike an exclusive relationship that can’t be matched by Google. In essence, Bing is betting that social signals are better than link signals in determining search relevance.

Facebook co-founder Mark Zuckerberg himself made this announcement of a social search partnership with Bing. Zuckerberg stated, “What makes this a great partnership is that in this case Microsoft is the underdog in search. In fact, I couldn’t think of anyone better to be working with to build the next generation of search!”

One of the first products of the Bing / Facebook partnership is that via a Bing iFrame, Bing search results are native inside of Facebook searches. Now, Facebook data will be integrated into Bing and influence search results based on signals from the searchers social connections. This product, called Bing Social brings Facebook posts and links that relate to the topic searched right into search results.

How does Bing bring the social context of Facebook into search relevance? Starting today, Bing is integrating data from your friends and social network into search results. This could include information on “likes”, reviews, photos and links from your friends into your search experience. According to Bing, search results will be really personal to the user, different than what others will see for the same search. This “instant personalization” will make a search by you relevant to you alone and not necessarily that relevant to someone else.

Obviously, the impact on SEO will be enormous. Search optimization currently relies extensively on relevant links from authority sites. If links and ‘likes’ from your personal social network become more important than links from websites then SEM’s will need to rethink their SEO strategy.

With the Facebook module your search results will now include information on what your friends liked or commented regarding the restaurant or movie or other item you searched for. Your Bing search results will actually be different depending on what your network of friends link to, like or dislike.

Another big implication is with a non-celebrity people search. Search engines don’t do this well today, often giving non-relevant results for common names. What Bing is going to do is use signals provided by Facebook such as location, friends, jobs and their interests to better determine what person you may actually be searching for. Bing is opening up features that will let you additionally add and confirm data back to Facebook as well. Bing also has plans to bring in the faces from Facebook of those who liked and disliked links that show up in your search results.

Social search may reignite the search wars. After all, Google rose up to conquer other search power houses like Alta Vista because PageRank made search results more relevant. If social search makes search results even better, then history has shown that the most relevant search algorithm will ultimately win consumers over!

- article courtesy of Richard Ord, Web Pro News


Media One Pro is an online web marketing company, rooted in Las Vegas, NV.  They have been on the leading edge of search marketing technology since 2002.  With this news regarding social search, Media One Pro is retooling its system in anticipation of changes ahead.  Who rules in the future, SEO (Search Engine Optimization) or Social Search, remains to be seen.

To visit our company in Las Vegas, feel free to call for an appointment and we will schedule a time to go over our SEO services.  Also visit our partner site 702SEO.

A few tips on using Social Media Marketing to increase your Business

December 18th, 2010

We hear many business owners ask the question, “Is there any real value in Social Media for my Business?” Whether you like it or not, today and in the future social media is, and will be, an important component for all businesses.

Whether you are a bricks and mortar business or an online Internet-based business, chances are your sales will go up if you are marketing your business. There are many offline businesses that can effectively leverage social media to strengthen and grow their businesses in creative and effective ways. It’s about thinking outside the box.

Most importantly, your social media marketing must fit in with your overall business Marketing Plan. If you are ad-hoc in how you use social media to market your business then yes you will probably get ad-hoc results. Be sure to implement a Social Media Marketing Plan to ensure you get the most effective results for your business.

Many of the popular social media websites, such as Facebook, Twitter, LinkedIn, YouTube, all engage prospects and customers, grow the awareness and popularity of your business and inevitably boost your sales.

If you are serious about taking your business into the 21st century, then you will need to embrace social media. There are many ways that businesses can use social media to their advantage. Here are just a few:

* Become an Expert:

The first step is to create your profiles on the various social media websites and then update them on a regular basis. You will need to check your accounts a couple of times a week to respond to comments from your followers. This a great way to build presence, to be seen as an expert and to build relationships with your followers. The more you update and are seen to be interactive with your followers, the stronger your business’s reputation will be. 
* Educate Don’t Sell:

Social media is another way to build relationships with people, prospects and customers that you may not ever have otherwise been exposed to. So make the most of it. In today’s market, consumers are getting smarter, plus we live a world of mass advertising. The last thing you want to do is sell your products and services on social media. It’s about educating your fans. Every once in awhile you might promote a workshop or specíal deal. Educate more, Sell less. If people want to find out more about you and your products and services, they can visit your website.

* Get the Whole Company Involved:

If you have a staff, get them involved and task them to update your social media posts on a daily basis. This is an excellent morale booster and your staff’s involvement will strengthen your marketing effort and grow your business’s online exposure. A little suggestion – you might want to keep an eye on how much time your staff spends on social media and that it is for work and not personal purposes.

* Take your message and content to your consumer:

You may want a website where you fill orders, capture data, or simply demonstrate your product, but you shouldn’t assume your customer will instantly come to you. Twitter, Facebook, Linked In, and YouTube are all basically free tools. You need to go where your consumer lives online. If your customers, prospects, and influencers are there, you should be there: listening, engaging, sharing, and helping them.

* Encourage People to Join You on Social Media:

Ask people to “Like” your social media pages. You can promote social integration on your business receipts, signs, brochures and invoices so that your existing customers will want to jump on the social media train as well. You can also ask your customers to check in to Foursquare or one of the other geo-location sites once they arrive in the general proximity of your store, offering them special promotions to entice them to come in.

* Keep an Eye on Your Competitors:

Social Media is a great medium to keep an eye on your competitors and stay ahead of the game. It is a great way to research whether your competitors are offering special promotions, how active they are on social media, who is following them and what they are saying. Always remember to stay on top of what your competition is doing by reading everything that they post. Remember that you and other businesses are always fighting to stay on top.

* Become a Community:

People want to feel like they belong to something i.e. a community. This is your job and social media provides a perfect platform for this. People are more likely to purchase from people They Know, They Like, and They Trust. The way to achieve this is by having live events at your store as well as events online. Promote unique deals, give advice and Be There for your community.

* Start Small:

If you don’t have any help in managing your social media accounts and you try to do it all by yourself, you may find that you aren’t doing it well or at all. Start with one and get comfortable with that. Make sure that you go for quality over quantity.

* Listen and Learn:

Are you aware of what your existing customers and potential customers are saying about your business, products and services, and brand? Pay special attention to the comments that people are posting online. It is also a good idea to set up Google alerts and to immediately handle issues as they occur. This is your chance to show people how much you care about them. Help them to solve their problems and address whatever concerns they have. Generally people are okay if a mistake is made, as long as you resolve it.

* Connect your customers and prospects to each other:

One of the best things you can do as a young company is to foster word-of-mouth conversations among your earliest customers. Whether you do it on Facebook or on your own site, it’s important to invite your customers to talk to each other and share ideas. Allow them to guide one another on how they use your product or service. Not only will you have the opportunity to learn what people like and don’t like about your product, you may end up with a bunch of people you can ask to help you.

* Be Patient:

It takes time to see significant results with social media when it comes to the success of your business. Remember that your hard work will definitely pay off and the more relationships you build and the more you interact with others, the more interested other people will be in connecting with you again and again. It’s also important to remember that social media does provide a means for you to connect with people you might otherwise not ever have had the opportuníty to meet.

* Find inventive ways to create or gather content:

For starters, make your website into a blog. Fresh content, the ability to post comments, and pages that get linked to will add to your online visibility. No doubt it’s challenging and time consuming to generate enough content to populate your network and blog, but there are smart ways to go about it.

First, whatever you’re doing, write about it. Report on your progress. Second, come up with a daily question you’d want someone to ask and respond to it in a blog post or video. Third, save time by collecting content from others. Place your product or service, even in beta form, in front of people willing to blog, make videos, and tell stories about it. Aggregate this content to your blog or video channel. Fourth, conduct polls or ask questions about a related topic and turn these results into future posts as well as “news” you can release to both bloggers and press.

* Get on Twitter and use it actively:

It takes time to build a large Twitter following, but it’s a quick way to connect with industry influencers, bloggers, and press that might matter to you.

No matter what you sell, someone on Twitter is having a conversation about it. It’s your chance to listen, respond, and engage with potential enthusiasts. More importantly, on Twitter there’s a willingness to help each other that you just won’t find anywhere else. Perhaps it’s because re-tweeting information is virtually effortless, or that people practically vie to share new finds, or that users feel a sense of obligation to those who follow and promote them, but for whatever reason, you’re likely to find people who are willing to help promote your brand on Twitter, presuming you learn Twitter protocols and give more than you take.

* Start Crowdsourcing:

“Crowdsourcing” allow your customers to participate in the creation of your brand. If you want a great example, take a look at how HBO seeded True Blood. Instead of advertising, HBO shipped samples of synthetic blood to popular videographers and bloggers, who, of course, couldn’t resist making videos or posting pieces about the mysterious liquid. You may not have anything as cool as fake blood, but you can still learn to think this way.

* Giveaways:

You can use social media to give away free products from your store. This is sure to attract attention. People will want to interact with you and will want to be the first to know when you introduce new products and services. Be careful, however, of not over doing the promotion and competitions.

Social Media is here. Many consumers are spending hours online, so it makes sense to have a presence as well for your business. The real results will come when you are strategic about your social media marketing. It’s all about taking your business into the 21st century. If you are ready to embrace it, so will your clients. Then watch your business grow.

About 702SEO

702 SEO is a firm that specializes in Online Marketing & Sales, helping passionate and committed businesses to grow their client base and reach a new level of success through custom online Sales and Marketing systems. If you want to learn more about how to grow your business, SEO Services in Las Vegas.


Video Marketing – Why You Need To Use Video

December 18th, 2010

Unless you’ve been living under a rock for the past decade, then you already know that in order for  entrepreneurs to survive inside the marketplace, they must do one thing and do it properly, and that’s drive traffic. There are hundreds of methods to drive traffic, some useful and some not so efficient, but there is one technique that has proven itself time and time  again and as a matter of reality will be the preferred medium for productive net marketers.

Video Marketing is by far one of the easiest ways to brand your self as a expert inside your marketplace. When you need to generate trust, credibility and create traffic, all at the similar time, making use of video marketing smart and effective for your enterprise. Video is straightforward to produce, is often pretty affordable if executed correct, and is among the quickest in driving targeted traffic.

Through video marketing, you get a real sense of who a person or a business really is.  You really feel like the barrier has been broken and also you get a feel of who the particular person definitely is. Video marketing itself can create a lifetime brand for you and your business enterprise. Sound is effective, utilizing picture works, but there is absolutely nothing compared to video. Just one brief 1 minute video can increase your individual branding and sales effortlessly.

Ways to use marketing to drive far more traffic to your internet sites

One major positive from video marketing is that it is viral. Videos have the tendency to be shared quickly and effortlessly, thanks to all of the new social media networking websites available. You do not need to just limit your videos to YouTube or Viddler. With the built in sharing features of internet sites like Twitter, Facebook and MySpace, you can effortlessly get your video in front of a large audience rapidly, and also the superior factor about this is, people are now much more conditioned to view video and are much more likely to share it with their community as opposed to just regular written content material.

Video marketing does not have to be costly, in fact it’s not even close to as high priced as it was years ago. Now, you can create and upload a video you recorded making use of a HD Flip Camera and even a cellphone camera for example the blackberry or iphone etc. The perception of video now is that it is far more personal than it was years ago.  It doesn’t have to be the highest quality resolution, as long as it delivers the message effectively. In the event you haven’t been making use of video yet, now will be the best time to capitalize on 2011 and put your self one step ahead of one’s competition.

Super Bowl ads play the social-media game

December 16th, 2010

The Super Bowl used to be a football game, but advertisers are turning the upcoming gridiron event into a high-stakes social-media game.

Today, rivals Mercedes-Benz and Audi will unveil separate plans to launch high-profile social-media contests that offer hefty prizes to consumers who best use unconventional social-media tactics to tweet and digitally tout the foreign brands before the Super Bowl.

“We’re using the 2011 Super Bowl as our head-long plunge into committing to social media,” says Stephen Cannon, marketing vice president at Mercedes-Benz. “It’s our strategic leap of faith.”

Most major marketers in the 2011 Super Bowl will have strong social-media components in their campaigns. It’s all about establishing relationships that go far beyond the 30-second TV slots selling for $3 million each. All 68 slots for the Feb. 6 contest on Fox have sold out — months earlier than in the past few years.

Social media, however, is this year’s biggest driver. But watch out. “Most efforts won’t be able to stand out amidst the flood of ‘Let’s Do a Facebook Contest About the Super Bowl’ marketing lemmings,” warns social-media consultant Jay Baer.

Even so, “The ones that don’t do it will be left behind,” says Pam Moore, a social-media consultant. But, she adds, the tweets and Facebook “likes” that Super Bowl marketers all are glomming onto today will seem archaic in just a few years.

Some social-media moves by the automakers:

•Mercedes-Benz. It will unveil plans to launch “The World’s First Twitter-Fueled Race,” which awards two new cars to the two-person team of social-media wizards that garners for Mercedes-Benz the most tweets, Facebook “likes” and social-media currency by game day.

Today, on its Facebook page, Mercedes-Benz USA issues a casting call for social-media users who want to compete in its Twitter-Fueled Race.

Besides rolling out new models in the game, in the next few years Mercedes plans to create cars targeting a much younger demographic, Cannon says. It wants to be much more social-media savvy long before that, he says.

•Audi. The carmarker, in its fourth Super Bowl with a 60-second spot, will host an Audi Inner Circle social-media contest open to everyone.

Audi will seek out — and reward — its 10 “most active” social-media fans before the Super Bowl. It will award glitzy trips and other prizes to the fans whose social-media posts are most original and most numerous. “We’re trying to use social media to glue everything together,” say Scott Keough, chief marketing officer at Audi of America.

–  article by Bruce Horovitz, USA Today

Social media shapes new investment strategy

December 15th, 2010

You’ll let a friend walk your dog, drive your car or watch your teenager. Would you let them — or someone you don’t even know — invest your money?

That’s the idea behind “mirrored investing,” an invention that could be one of the most dramatic experiments in the world of online investing since the ability to place trades over the Internet shook up the brokerage industry more than a decade ago.

As crazy as it might sound, a new breed of online services and brokerages are betting that investors don’t just want to meet and chat with other investors, but also turn control of their entire portfolios over to them. It’s such a new development that

Mirrored investing allows you to essentially turn the keys of your portfolio over to another investor — sometimes a friend, other times a stranger. When that other investor makes trades in their own account, the trades are executed, or mirrored, in your account at virtually the same time.

If the investor you’re following makes money, you ride along with them to riches. But if they flame out and lose money, so do you.

Mirrored investing brings social networking, so far just a technology used to trade photos, gossip and news with friends, into arguably the most private and important nooks of people’s lives: their portfolios.

This “goes beyond sharing. This is attaching,” says Joseph Fox, CEO of Ditto Trade, a brokerage firm created a month ago to offer mirrored investing. “You can now connect to investors who have been successful and put jumper cables on their trades.”

The concept of mirrored investing has been bandied about for years, but the theory is going into practice quickly as firms are making it happen. Ditto Trade is registered with the regulatory body FINRA and is opening accounts. Brokerage giant TD Ameritrade offers mirrored investing to customers through a service called Autotrade.

Mirrored investing is also being offered by firms that aren’t brokerages, including Wealthfront and Covestor. Another brokerage firm, Folio Investing, is readying its mirrored investing site for 2011.

Firms make it happen

The time is now for mirrored investing, advocates say. It’s technology that lets individual investors compete with Wall Street while they’re outgunned by high-powered trading computers that buy and sell stock at the speed of light and they’re blocked out of the research generated by high-price research services, Fox says.

It’s ideal for investors who recognize that it takes time, dedication and experience to research the stock market but who don’t have the time themselves to dedicate to it, Fox says.

“I’m a market idiot. Placing trades on my own is something I can’t do,” says Darlene Gousios, 44, of Elgin, Ill., who started following a trader on Ditto Trade three weeks ago.

Meanwhile, there are many talented money managers who don’t want to fuss with the hassle of running a mutual fund, says Wealthfront founder Dan Carroll.

Wealthfront’s technology allows investors with smaller portfolios to follow the trades of large money managers, who typically shy away from taking on small accounts, says Bill Winterberg, a financial adviser technology consultant. It’s worth these money managers’ time as they collect fees from those who follow them of up to 2% of their portfolio value.

The concept of mirrored trading is simple and will be familiar to anyone who has used social-networking sites such as Facebook and Twitter.

The first step is to find another investor you’d like to connect with. The mirrored investor sites provide tools to help you find other investors who have had strong performance. You can narrow your search to find investors who are succeeding with a specific strategy, such as focusing on large U.S. stocks or foreign stocks.

Once you find an investor you’d like to follow, you consent and then you’re connected. If that trader makes a trade, it’s made, in proportion to the size of your portfolio, in your account. It’s based on the idea that some investors have the talent, time and energy you may lack to beat the stock market.

A question of control

The concept of following other investors is just the digital version of the way many investors have prospected for stocks for years. Investors have long traded stock tips with relatives at family picnics. And investors have been chatting about stocks online since the early days of the Internet in anonymous chat rooms.

Yet most of the larger and more established brokerage firms, including those at the forefront using social networking in various ways, say mirrored investing goes too far. Not only can it violate investors’ trust if trades go bad, it’s counter to the trend of investors wanting to take control back, not give it away.

There’s also the danger of investors giving control of their portfolios to strangers with inappropriate strategies, Winterberg says. “It would be unfortunate for a near-retiree to mirror the trades (of an investor) … who turned out to be a 19-year-old high-risk options trader,” he says.

Brokerage TradeKing allows investors to view each others’ trades if they agree but has no plans to add mirrored investing, says CEO Don Montanaro.

“There’s a reason we haven’t done that,” he says. It’s a bad idea for investors to mirror the trades of a hot investor, only to suffer once that trader’s streak runs out, he says.

Then, there’s the matter of control. Many TradeKing investors like to see what other investors are doing, but “That’s a far cry from turning the keys over to them,” he says.

Mirrored investing has been tried before in various forms unsuccessfully already, says Michael Raneri, CEO of brokerage firm Zecco. Before changing its name, Wealthfront was KaChing, a mirroring service designed to pair investors with other investors.

Demand for its mirrored investing offering is not huge, says Nicole Sherrod, managing director of the TD Ameritrade’s trader group.

Investors have legitimate concerns with mirrored trading. “You’re placing a lot of trust with the person making the trading recommendation,” she says.

Worries about fraud

There are also more serious concerns, too, as some worry about ways the technology could open up new avenues for securities fraud. It’s possible, for instance, for an investor who is being widely followed to illegally profit from the fact that he controls captive buyers.

One of these traders, for instance, could buy a stock in a separate personal account, then issue the same order in the mirrored account, pushing up the price as all the following accounts buy the stock as instructed.

He could then sell the stock in the private account at a profit, before selling in the mirrored account triggered more selling and, thus, a lower price. In a way, that would be a version of the old “pump and dump” scam.

There is reason to be mindful of the risks. Mainstream social-networking sites have already been used in an alleged securities fraud. The SEC charged two Canadians in June for using social-networking sites Facebook and Twitter to tout penny stocks and mislead investors by predicting big jumps on the stocks’ prices.

Executives at the mirrored investing sites say they have safeguards against fraud.

Covestor, for instance, won’t let an investor who’s being followed initiate a stock trade that would result in trades accounting for 15% or more of that stock’s daily activity, says CEO Perry Blacher.

He says this limitation severely curtails any influence a single investor could have on the market, even if that investor has a wide following.

Investor beware

Another knock against mirrored investors are fees. With Ditto Trade, you pay $4.95 per transaction, either buying or selling. But those commissions can add up if the investor you’re following trades frequently. Covestor charges an annual fee of between 0.5% and 2% based on the assets invested.

Mirrored investing is a potentially dangerous innovation for investors, says Chris McIsaac, head of Vanguard’s Portfolio Review Department. He fears some investors might get a false sense they can beat the market if they just tied up with a trader on a hot streak.

Tracking performance is just one of the many variables that goes with measuring which investors have skill, and even then, choosing winners is something that’s nearly impossible to do, he says.

“I don’t want to disparage these efforts, but I encourage anyone considering investing this way to evaluate carefully the person who they are investing alongside,” he says. “I’m skeptical.”

–  article from Matt Krantz, USA Today