Internet Companies spend millions on consultants

Large Internet companies spend millions on consultants and technology trying to get their sites to rank among the highest results on Google. Everyone else has to rely on the poor man's search-engine optimization: the link exchange.

The thinking behind link exchanging is that Google will record links as a vote of confidence for sites.

If you've ever hung up your own shingle on the Web, you've probably gotten an e-mail to this effect at some point: "Dear So-and-so, I believe your site and mine could benefit from exchanging links."
We probably get eight to 10 a week in the CNET News general mailbox, mostly from technology-related companies but occasionally from auto-parts suppliers and watch retailers who either have no idea what we do or few moral qualms about spam.
The idea is that if you can coax a link out of a large site like CNET, Google and other search engines will record that link as a vote of confidence in your site's worthiness and improve your ranking in searches for certain topics, thereby boosting traffic to your site. The technique is quite old, dating back even before Google and its PageRank system emerged as the Web's dominant search engine.
But does it still work? And at what point do two or three sites struggling to get off the ground veer off the road from mutual assistance to a full-blown spam operation designed to game the system?
Evan Duffield, for one, thinks it still works. He contacted us trying to get CNET to exchange links with WarpedAI.com, a site he has launched to promote stock-trading tools for day traders, and says he has been able to slowly build up the PageRank of another site he owns using techniques that don't run afoul of Google's Webmaster guidelines.
"It's kind of a vicious circle," he said. "To start a new business you need PageRank, but to get PageRank you need links to your service. You have to get the ball rolling."
Don't Miss
Latest CNET News videos
CNET News image galleries
More technology news from CNET
PageRank is the currency of the Web. Google's novel approach to site indexing way back when was to evaluate the worthiness of a site based on how many other sites were linking to it, also taking into account the worthiness of the sites passing along the links.
This meant, and still does mean, that a link from a site with a high PageRank counts for way more than a link from a site with low PageRank.
But how do you get a link from one of those sites? Google's official advice: "The best way to get other sites to create relevant links to yours is to create unique, relevant content that can quickly gain popularity in the Internet community." That, of course, sounds like something your mother would say.
In a Web as vast as this one, getting attention for a new site, even one with superb content, is a very difficult undertaking. Bloggers can discuss each other's work and help each other build up a following, but if you're selling a product or service it can be much more difficult to climb the ranks of search results for things like "day-trading software" when you're starting from scratch.
So Webmasters like Duffield turn to solicitations for links. Danny Sullivan, who writes about search-engine optimization for Search Engine Land, says "if you're a new site, absolutely you want to be doing link building. But you need to be doing that in a smart fashion."
Duffield says he's very careful to only solicit links from sites that are related to his product: his pitch for exchanging links that somehow wound up at our doorstep was addressed to computer-go@computer-go.org, a mailing list for hobbyists trying to tackle the difficult chore of building a computer AI system for the ancient game of go.
That was a mistake, he said; the result of prematurely hitting send on an e-mail template. Duffield compiles his targets by searching for sites that are related to finance and stock trading, and attempts to contact a general e-mail address to pass along his site's information and offer a link exchange.
"It's not about the actual links so much as it is optimizing search queries," Duffield said. "When I figure out a query I want from Google, I can see the top three positions have this much page rank and this many positions, and try to beat that out."
As long as people like Duffield are exchanging links without offering payment, or crossing obvious lines such as breaking captchas and posting spam links in guestbooks or comment forums, they're following the spirit of Google's Webmaster guidelines.
"Where it tends to get into tricky issues is where people are doing it primarily for payment," Sullivan said. "Search engines would see links as votes. Google does not like that people would simply be buying links to do better.
While paid links are clearly off-limits, Google appears to ban link exchanges in general, saying it does not allow "excessive link exchanging" but failing to define exactly what constitutes "excessive."
Other practices that are verboten include links to "bad neighborhoods" on the Web and complicated networks of several Web sites with little content but pages and pages of links amongst themselves that Google can usually identify.
For the most part, however, the practice is rampant enough that only the most egregious violations get snagged. "If you start thinking too much about not getting caught, you're probably doing things you shouldn't be doing," Sullivan said.
In an era where SEO is a budding industry unto itself, link exchanges are perhaps the most basic approach. Far below the realm of those dithering over Google's search index are those like Duffield trying to make something out of literally nothing.
While he needs to build PageRank equity to get started, Duffield acknowledges that at a certain point that Google is right: a site will live or die on its content. Link exchanges only work to get one's name out there: the real boost needed to turn a Web site into a business comes when real people start discussing and linking to a service on blogs, message forums, and social-networking sites.
That's when your search ranking (and therefore traffic) really starts to grow, he said. "If you can make Google see that something is being talked about all over the Internet, what choice do they have?"

All participants have access to the same pricess.....

Unlike a stock market, where all participants have access to the same prices, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest investment banking firms. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. The difference between the bid and ask prices widens (from 0-1 pip to 1-2 pips for some currencies such as the EUR). This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the “line” (the amount of money with which they are trading). The top-tier inter-bank market accounts for 53% of all transactions. After that there are usually smaller investment banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX-metal market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size” Central banks also participate in the foreign exchange market to align currencies to their economic needs.

The challenges of Micro finance

Traditionally, banks have not provided financial services to clients with little or no cash income. Banks must incur substantial costs to manage a client account, regardless of how small the sums of money involved. For example, the total revenue from delivering one hundred loans worth $1,000 each will not differ greatly from the revenue that results from delivering one loan of $100,000. But the fixed cost of processing loans—of any size—is considerable: assessment of potential borrowers, their repayment prospects and security; administration of outstanding loans, collecting from delinquent borrowers and so on. There is a break-even point in providing loans or deposits below which banks lose money on each transaction they make. Poor people usually fall below it.
In addition, most poor people have few assets that can be secured by a bank as collateral. As documented extensively by Hernando de Soto and others, even if they happen to own land in the developing world, they may not have effective title to it.[4] This means that the bank will have little recourse against defaulting borrowers.
Seen from a broader perspective, it has long been accepted that the development of a healthy national financial system is an important goal and catalyst for the broader goal of national economic development (see for example Alexander Gerschenkron, Paul Rosenstein-Rodan, Joseph Schumpeter, Anne Krueger etc.). However, the efforts of national planners and experts to develop financial services for their nations' majorities have often failed since World War II, for reasons summarized well by Adams, Graham & Von Pischke in their classic analysis 'Undermining Rural Development with Cheap Credit'.[5]
Because of these difficulties, when poor people borrow they often rely on relatives or a local moneylender, whose interest rates can be very high. An analysis of 28 studies of informal moneylending rates in fourteen countries in Asia, Latin America and Africa concluded that 76% of moneylender rates exceed 10% per month, including 22% that exceed 100% per month. Moneylenders usually charge higher rates to poorer borrowers than to less poor ones.[6] While moneylenders are often demonized and accused of usury, their services are convenient and fast, and they can be very flexible when borrowers run into problems. Hopes of quickly putting them out of business have proven unrealistic, even in places where microfinance institutions are very active.[citation needed]
Over the past centuries practical visionaries from the Franciscan monks who founded the community-oriented pawnshops of the fifteenth century, to the founders of the European credit union movement in the nineteenth century (such as Friedrich Wilhelm Raiffeisen) and the founders of the microcredit movement in the 1970s (such as Muhammad Yunus) have tested practices and built institutions designed to bring the kinds of livelihood opportunities and risk management tools that financial services provide to the doorsteps of poor people.[7] While the success of Grameen Bank (which now serves over seven million poor Bangladeshi women) has inspired the world, it has proved difficult to replicate this success in practice. In nations with lower population densities, meeting the operating costs of a retail branch by serving nearby customers has proven considerably more challenging.
Although much progress has been made, the problem has not been solved yet, and the overwhelming majority of people who earn less than $1 a day, especially in the rural areas, continue to have no practical access to formal sector finance. Microfinance has been growing rapidly with $25B currently at work in microfinance loans.[8] It is estimated that the industry needs $250 billion to get capital to all the poor people who need it.[8] The industry has been growing rapidly and there have been concerns that the rate of capital flowing into microfinance is a potential risk unless managed well

Nepal is one of the poorest country in the world and the poorest in the South Asia region.

Nepal is one of the poorest country in the world and the poorest in the South Asia region. Its poverty reduction rate is low. The main reasons for this low poverty reduction rate are: (i) low per capital income, (ii) concentrated urban growth, and (iii) high population growth rate. Out of a population of 23 million, 38% are in below the poverty line. Most of the poor people live in rural areas and have little opportunity. Micro-finance could help poor people who have no collateral, but a willingness to work and a desire to do some business activities from which he/she will acquire employment as well as income.
Although many programmes have been implemented for poverty alleviation in Nepal, only micro-finance programs are seen as a poor targeted and rural based.
InNepalagriculture based co-operatives were initiated in the 1950s as a first step in micro-finance. Poverty alleviation rural based programs were initiated through the small farmers development program (SFDP) on a pilot test basis in 1975 by the ADB/N. The success of the pilot tests in Dhanusa and Nuwakot districts encouraged policy makers to expand formal rural based micro-finance programs.
The SFDP is now being transformed into several autonomous, self-help organizations called Small Farmers Cooperatives Limited (SFCLs), which are managed by farmers themselves. Other micro-finance development programs, such as Priority Sector Lending Program (PSLP), Intensive Banking Programme (IBP), Production Credit for Rural Woman (MCPW) and Rural Self-Reliant Fund (RSF) have been implemented. After studying the pros and cons of various microfinance development programs government began to rethink the delivery mechanisms of micro-finance.
In 1992, government set-up two Grameen Bikash Banks as a replication of the Bangladesh Grameen model of micro-finance delivery. Government also created a situation to encourage participation in the micro-finance by the private sector. Subsequently Nirdhan, CSD, Chhimek and other organisations came into existence. RMDC was also established to support micro-finance institutions by giving wholesale credit, initiating training and other necessary support to the MFIs. Some Government directed Programs (TLDP, Bishweshwor with poor, PAPWT, Community Ground water project, etc.) have been implemented in coordination with NRB.
MFIs are dependent on small savings from group members. As a definition Micro-finance is, as a part of development finance, rural or urban, targeted towards specific groups of people, male or female, falling in the lower bracket of society. Financial services include savings, credit and other services such as micro money transfer and micro-insurance. This service is differentiated by types of service employment and income orientated objectives, target group, target community, target area and credit at home.
In the past decade, micro-finance has been recognized as a particularly effective development intervention for three basic reasons:
The services provided can be targeted specifically at the poor and poorest of the poor.
These services can make a significant contribution to the socio-economic status of the targeted community.
The institutions that deliver these services can develop, within a few years, into sustainable organizations with steadily growing outreach.
In this context, it is important to make a couple of distinctions:
Micro-finance is more than the provision of credit. It involves the provision of other financial services (most usually savings and insurance) and recognizing that even the poor have a variety of needs, not just credit.
Securing sustainable access to micro-finances for low-income communities involves building (or reforming) micro-finance institutions- not just the delivery of time-bound micro-finance programs (such as offering short-term revolving funds)