Wednesday, 22 February 2012

OAS at 67? OMG!

By Fred Vettese
In spite of some vehement opposition, the government will probably announce in the next budget the raising of the retirement age for OAS pension to 67. We have already been assured it won’t happen at least until 2020 so it will not affect Canadians over 57. The big question is whether this change will increase poverty among seniors.  The answer depends largely on how the increase in retirement age is implemented.
First, anyone nearing retirement should find it encouraging that Canada’s retirees are currently doing better financially than most of us realize. If we use Statistics Canada’s low-income cutoffs as the poverty threshold, just 5.2% of seniors would be classified as poor. By comparison, the poverty rate for Canadians age 18-64 is 10.5%, more than double. Similarly, seniors are faring much better than their counterparts in other developed countries. Based on OECD statistics, the poverty rate for seniors is 22.4% in the U.S., 22% in Japan and 17.6% in Switzerland, all roughly three to four times the rate in Canada.

Much of the credit for this happy result is the Guaranteed Income Supplement (GIS) which is payable to low-income Canadians who are eligible for OAS. What will become of the GIS if the OAS retirement age rises to 67?  I see three scenarios. One is a decoupling in which the GIS will still be available at 65 and the amount will be increased to make up for the loss of OAS. If so, low-income Canadians will be virtually unaffected by the change in OAS retirement age and the government will still garner some savings to the extent less OAS is paid to middle income seniors. This is the most benign outcome.
Under a second scenario, GIS will continue to be payable from 65 but with no change in the maximum amount. In that case, future low-income retirees will lose $540 a month of OAS pension until age 67.  The middle-aged who are caught by the change in retirement age will find this a hardship though that can be mitigated by a slower phase-in that extends beyond 2020.
The most draconian scenario would see GIS eligibility increased to age 67 to align with OAS. For a single person, this means the loss of up to $1,272 a month in pension for two years. It is unlikely something this drastic could be fully phased in as early as 2020.  It took over thirty years to reduce poverty among the elderly to the low levels we now enjoy and it would be a tragedy to unravel what has generally been a very positive result.
The other possibility is that OAS and GIS will be made available over a range of ages with actuarial reductions or increases, the same as CPP which can be taken any time between 60 and 70. Making this work presents an interesting actuarial problem given that the GIS is subject to an income test.
In the longer run, Canadians will accommodate to a higher retirement age, but that will take time. We first need to change how we think about work and retirement. Age 65 was an arbitrary choice as the normal retirement age in the first place, the same as it was an arbitrary age for mandatory retirement, which has since been abolished. The retirement age could just as easily have been 70, which in fact is what it was when the Old Age Security Act was first introduced in 1952. Since then, life expectancy has increased by about six years so even if OAS starts at age 67, we are still enjoying OAS payments for about nine years more on average than was the case in 1952. Unfortunately, this is small comfort to middle-aged, low-income Canadians who were counting on OAS at 65.

Thursday, 2 February 2012

Is Google Adwords Good or Bad and Will it Work for My Small Business?

Welcome to Small Business Blogging, Video Marketing, Website Design, and Hubspot Tips by Biz Buffs!

Is Google Adwords Good or Bad and Will it Work for My Small Business?

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Is Google Adwords Good or Bad and Will it Work for my Small Business?

does adwords work for businessThis article was sparked by a conversation I had with a friend recently. His dilemma is pretty cut and dry:
His business(he installs swimming pools) is not getting enough leads, his suppliers are not sending him enough leads, and his website stinks in terms of lead generation…. and SEO(free search visits).
So what was his proposed solution to the problem? Well in his mind, he needs to get leads right away. He also knows the old methods of advertising (radio, print, TV,etc) are no longer the answer. But with a website garnering zero visitors via organic/free search, his last line of relief is Google Adwords (aka Pay Per Click). And frankly, he’s right—at least for now.
In terms of Google Adwords  (AW for short)supplying quick, qualified leads for businesses, it is a viable solution-- but with it comes the potential of some major problems, which are as follows:
  • Spending money faster than you can burn it on a camp fire
  • Reaching a small percentage of your customer base
  • Adwords Dependency Syndrome (ADS)

How Much will Adwords Costs my Business?

Heck, even my friend mentioned how one of his buddies in the pool industry had spent $120,000 on PPC last year just to sell 30 pools. Although such might sound like a good trade off to some, the amount this person was spending in advertising dollars(to Google alone) just for one sale was roughly $4,000. Considering the average sale price was about 35k for one of the gentleman’s, the numbers were eating him alive.
My business used to be no different. Because our swimming pool website stunk for so long in terms of its SEO, we were forced to give the Mother Ship(aka Google) way too much of our money. But like every business in this dilemma, we needed leads from somewhere, somehow, and fast. Over  2 years ago, we were getting roughly 85% of our traffic from AW/PPC. Literally, every 2-3 days we were having $500 kicks to the groin by the Mother Ship. Although many leads were coming in, we knew there was still room for improvement, and AW was quickly becoming a blessing and a curse.

Do Consumers Click on Adwords?

Although the studies vary, the general rule of thumb is that 60-70% of ALL surfers on the internet will not click the right side of the page—AKA Sponsored Links. There are a variety of explanations for this but it really just comes down to, as the old adage states, ‘People don’t want to be sold, they want to buy.’ And because of this paradigm, the majority of internet users never even bother with AW advertisers. So as you can see, if you have a business that is relying solely on Pay Per Click campaigns to drive traffic to your website, they you’re likely missing out on over half of your potential clients.
Adwords Dependency Syndrome (ADS)
I’ve seen many businesses suffer from ADS. And why is this such a deadly disease? Because the fact is most businesses are now finally waking up to reality that if they don’t have a powerful internet presence, they are up a creek without a paddle. Old school advertising will soon be as extinct as the dinosaur simply because of the poor return on investment (It’s too freaking expensive). But at the same time, because businesses are now fully understanding just how consumers shop and research, and because so many of these businesses have not bothered to properly optimize their website, their only means for lead generation is Pay Per Click—the same dilemma my friend had. This leads us to a whole new problem, which is the fact that so many businesses are advertising on the Mother Ship and using AW that the cost/competition to advertise on Pay Per Click and actually showing up on the first page is becoming outrageously expensive and unaffordable for many important industry keywords.
So this is the catch-22 that so many businesses are now enveloped in. And what’s the solution? Although there are hundreds of ways to deal with small business marketing in 2010 and beyond, here are my top 5 solutions for anyone who hasn’t yet gotten on the train or not read some of my previous posts on this subject:
1.       Change your paradigm: Embrace the internet and everything about it. See yourself as an internet/web expert (If you’re not already, you will be someday, so your essentially just stating a fact before it has actually happened.)
2.       Take charge of your website: You no longer have to be a web designer to design and manage your business’ website. With so many incredible CMS (content management systems) out there, any dummy (I should know) can now produce great websites.
3.       Along with #2, take the time to study your website. Develop it. Learn analytics. Because they had such a profound impact on my life and my business, I suggest you start with Hubspot. They money you’ll spend on their monthly service is more than worth it.
4.       Start Blogging: I can’t talk about the power and impact of this medium enough. It does not matter what type of business you have, you need start integrating blogging into the everyday life of your business. Only 1-2 articles a week and you will see major organic (free) search results in no time.
5.       Continue with AW: As I mentioned earlier, PPC used to generate over 80% of my business’ web traffic. Today, after blogging and working on SEO for less than one year, PPC brings in roughly 12% of all traffic. Despite the fact that 12% is a low number and many people would say that because my organic search traffic is so good I don’t have to worry any longer about Adwords, I still like leveraging both mediums. And although only 20-40% of all internet users actually click on AW, these same shoppers have a much higher conversion rate in many cases because they are so serious about finding a certain product. Also, when it comes to PPC , don’t feel like you have to rank #1 just to get clicks. What matter is that you’re on the first page. The difference between the two can literally be thousands of dollars over the course of the year.

Is Google Adwords bad for business?

No, of course not. But like every other information technology we pay for, it requires a balance, oversight, and hard work. So that’s the task for most business in today’s world. And to sum it all up, I’ll leave you with this most simple guideline to follow.

Mariner Motel has tried free google adwords and it is working out well.  Give it a try increase the traffic to your site and get it listed at the top when people search for your type of business.