Our last tip is probably the one you're most interested in:
10. Can search engine optimisation improve your ROI?
Ultimately, all this comes down to return on investment. All the search engine optimisation in the world is not worth anything unless it can be demonstrated that the cost relative to the revenue is attractive in comparison with other marketing channels.
Fortunately it is easy to quantify the results of search marketing. The only difficulty is quantifying the other channels.
For example, if you know the conversion rate of new visitors to sales and the average lifetime value of a new client, then you already have most of the information you need. You then need to know the costs of doing business over the internet compared with over the phone or face to face or through any other channel.
If, in common with many other internet based operations, you find it cheaper and more profitable to deal over the Internet then you can calculate the profit of a new customer per channel and the appropriate acquisition cost of a new customer.
If each item you sell is relatively inexpensive but very high volume then you had better generate lots of customers per pound of search engine optimisation. Examples of sites that need to do this are flight or insurance website.
If what you sell is lower volume and higher value, then you can afford to spend more on aquiring individual customers.
Any good search engine optimisation company is going to be able to establish whether or not it makes commercial sense to invest in search marketing.
Here is a simplified example;
| Current new visitors per month |
1,000 |
Current conversion rate |
10%
|
New sales per month from new visitors
|
100 |
Average lifetime value of new internet customer
|
£100 |
Margin on new internet customers
|
25% |
Available margin
|
£25 |
Proposed spend as a percentage of margin
|
20% |
Amount available to spend per new internet customer
|
£5.00 |
Amount available to spend on new visitors using above conversion ratio (10:1)
|
£0.50p |
In this example, if the model is actually more profitable than other channels available then it would make sense to generate as much traffic as can be generated for 50p per visitor. If the search engine optimisation partner understands that and can deliver at that rate then the partnership will work, but if not then either the parameters will have to change or the partnership is unlikely to deliver useful results.
Undoubtedly, many businesses are ideally suited to operating on the Internet. The cost model works well and it’s just a race to get the most traffic. Some sectors are already sewn up in the sense that without an upfront investment it will be impossible to leap-frog the existing competition without taking the long term view. In other words it would now cost so much to put together a site that would overtake the established players, it would have to be viewed as a sunk cost or long term investment.
Happily most sectors are still wide open and available to the switched-on company who uses search engine optimisation experts to help them. But probably not for long!