Tuesday, 12 December 2017

ROI in 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 seems 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 website. 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 Email 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 the mid-sized site through a firm may run from a few thousand dollars to over $ 50000 for a large site. If you do it in-house 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-a-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. Clickthrough 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.

Determine the value of a visitor to your website

Determining the value of each keyword, and in turn, each visitor is vital. The simple formula goes like this: Divide the average number of new customers each month (a long enough period to be statistically significant) by the average number of monthly visitors to get the percentage of visitors who actually become customers. If you multiply this percentage times your average profit margin on sales to new customers, you get a good idea of how much a visitor is worth to you on the first visit.

For example: If I average 10,000 visitors per month to my website and sell 150 of them a product with a $20 profit margin, then I can easily calculate the percentage (150/10,000) to be 1.5%. Multiplying the 1.5% by $20 yields a $0.30 value for each visitor.
It's interesting to look at the bigger picture of this example as well. While making $0.30 per visitor doesn't seem like much, the dollars get big quickly when you multiply pennies by thousands of visitors. My profits for the month with 150 sales would be $3,000 if I had no advertising costs. If I can generate the visitors for a cost of $0.10 each for a total cost of $ 1,000, then I have a profit of $2,000.

Re-evaluate and adjust your bids
If you determine that the traffic generated by a specific keyword is more valuable to you than other keywords, you can go online and immediately raise your bid for that term. You will instantly increase your traffic.
It would be a good idea to even track the patterns of which days and times generate the most sales from Search Engine traffic. During this prime time, you should raise your bids to increase traffic. As soon as the slot ends, you should lower your bids to the old levels.

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