To Find Out How Much Money Your Investment Is Yielding
It’s a fact that you can’t measure what you aren’t analyzing.
This section shows you how to judge your return on investment so that you can
tell if your investment of time, money and dedication to your rankings is worth
all of the effort you’ve been putting forth.
We have looked at various strategies and options related to
search engine optimization. The key determinant that you have to use to
formulate your own strategies would be to ascertain the ROI from your plan.
There seem to be a surfeit of techniques, suggestions and tips for SEO. How do
you separate the wheat from the chaff? Moreover, the importance of each option
is closely linked to your own objective, and consequently your budget in terms
of management time and expenditure. How do you measure ROI?
Americans conduct an estimated 790 million searches per week,
according to research from ComScore Media Metrix. The Yankee Group reports that
only 20 percent of U.S. companies tracking their search referrals are measuring
performance beyond the initial click-through to the web site. This is very low.
The key to a successful search engine marketing strategy is constant testing,
revising and optimizing based on metrics. In order to maximize your return on
investment, you must measure the performance beyond click-through—by measuring
the complete interaction of your visitors with your site from acquisition to
conversion to retention.
Search engine marketing is similar to advertising and other
marketing campaigns. The marketing people would be interested in knowing the
results of any campaign and most often the result is desired in terms of
increase in company revenues. Name recognition, brand image creation and other
outcomes are important; however the bottom line is sales.
ROI should be able to determine your website’s conversion rate
in terms of the ability to persuade your visitors to take the action that you
desire them to take. At the same time, the success in terms of increase in sales
depends on several other factors such as the competitiveness and value in your
product or service offerings and the quality of your website to induce the
visitor to take action. The search engine marketing effort is to bring the right
targeted visitor, and bring the visitor to the right section at the right time.
Converting such a targeted visitor to a customer is not within the ambit of SEO.
How does search engine optimization compare with other options
for online advertising and promotion? Jupiter Research predicts that by 2006 the
spending on E mail marketing shall be $ 9.4 billion, whereas the spending on
online advertisements shall be $ 15.6 billion, and that on digital marketing
initiatives such as campaigns, promotions, sweepstakes, coupons etc. shall be
around $ 19.3 billion. Forrester predicts that total online advertising spend
should be $ 42 billion by 2005 a significant 9.5% of total ad spending.
Costs in search engine marketing include the cost of
optimization services as well as the paid inclusion and pay per click programs.
Typically the cost of optimization for a small to mid-sized site through a firm
may run from a few thousand dollars to over $ 50000 for a large site. If you do
consider around four person months’ work plus around two person
months of maintenance time over the ensuing six months.
How do you compare costs per click or costs per thousand
impressions for search engine optimization vis-à-vis other forms of advertising?
PwC report that the effective cost per thousand impressions or views (CPM) for
an online ad is around $ 3.50 for a general site (though it could be higher at $
10 to $ 100 for other specialized sites) compared to $ 19 for newspaper ads and
$ 16 for Prime-time TV.
The CPM for search engines is certainly higher, but then it
leads to targeted impressions. Thus it is important to look at targeting and
conversion rates, not just CPM. Click through rates for ad banners, in general,
can be as low as 0.4 to 0.5%. Conversion rates would show you what percentage of
visitors actually resulted in business. As discussed below, this may be easier
done in e-commerce sites.
Cost per click for important keywords at Overture could be as high as $ 0.50
to $ 5 or $ 10. The average bid reported according to one source is $0.73 per
click (for Overture). Thus this is already lower than the cost per visitor for
online ad banners. Overture can only cater to a small percentage of search
traffic, while Google, Yahoo and others comprise the larger portion; thus it can
be said with certainty that SEO is the most cost effective ROI generator.