Why are Search Marketing Firms like Hospitals?

Who is the search marketing "Professional" cutting into your website

Have you met the search marketing employee cutting into your website?

The hospital’s website rocks, but who the heck will be holding the scalpel over your anesthetized body? Likewise, a search marketing firm can sport a fantastic website, employ great sales people, be led by a luminary (who used to do the actual work), but success for your website depends entirely on the person or people actually doing the work for you.

In search marketing, there’s no upper limit to the expression of genius. An SEO or PPC Einstein would blow away the best of us every day. Like law or medicine, the professionals working directly on your case make all the difference. But in law or medicine, usually the goal is either accomplished or not: a surgeon doesn’t remove 80% of a tumor, and you’re either in jail or you’re not. In search marketing, each step in the sequence of work – a sequence which itself is a product of many brilliant choices about tools and processes – the search marketing pro (or his pre-conscious mind) will make key decisions almost every minute.

For example, in SEO, selecting key phrases to lace into your website is helped by software that ranks hundreds or thousands of synonymous phrases, and the final choice of phrases depends on an intuitive grasp of how much your inbound linkscape and subsequent PageRank will enable you to win for the shorter, more competitive and searched phrases vs. long-tail phrases for which page one positions are more likely. When writing the selected phrases into your text, the choice of repetition and close variants should factor, quickly and intuitively, the amount of conceptually related words and phrases already in that page’s copywriting. In theory, one could make such choices using more software and statistics, but that could take hours for every word choice. The SEO Einstein’s preconscious genius would make most of those choices with lightning speed and staggering acumen.

In PPC, rigorous and standardized optimization procedures that any bright employee could follow would accomplish a lot of success for you. However, the PPC Einstein would rapidly intuit the optimum blend of ad copy, landing page content, bid amount, and exact, phrase, or broad match with negative keywords – all prior to testing, so that from day one of the campaign weekly optimization is several months ahead of your competition.

Of course employee training, experience, and permission to research on company time are as vital as innate aptitude. A good search marketing firm will have procedures for efficiently transmitting to both new and seasoned employees the knowledge and wisdom in the firm’s and SEM industry’s leading minds. Still, some employees will never achieve that grace in search marketing which emerges from a rare blend of linguistic and statistical perspicacity.

So what does this all mean for your prioritization of web marketing investments? More than I can say in one blog post, but the salient advice for the marketing manager seeking a search marketing firm is to

  1. Ask how the firm trains new and old employees;
  2. Interview the people who will actually work on your account.

If you are considering hiring an in-house search marketer, stay tuned for my blog post next week.

Tips for Determining your Ideal PPC Budget Part 2

Polish abacus - Liczydło

We'd recommend a calculator, but it's your call.

Welcome to Part 2 of “Tips for Determining your Ideal PPC Budget”. Last week, in Part 1, we started talking about a strategy for determining your ideal budget for PPC (for those who haven’t been lucky enough to have such a budget imposed upon them from above). This strategy helps take a lot of the guesswork out of the process, and can give a pretty close to accurate projection of what a business could expect to gain under various budget scenarios. We figured out our average sale amount, our estimated conversion rate, and our estimated cost-per-click in Part 1. And now, it’s time for the fun part…

Let’s Do the Math!

Using your average sale amount, your estimated conversion rate, and your estimated CPC, you can make predictions based on different budgets.

Let’s start with a very modest budget of $5,000/month. The average sale amount is $200, estimated conversion rate is 1.5%, and average CPC is $1.50:

$5,000/month (budget) /$1.50 (CPC) x 1.5% (conversion rate) x $200 (average sale amount) = $10,000 (net revenue)

Not bad! But you need to factor your costs, including cost of goods, click costs, and any fees for a professional PPC firm to manage your campaign (I wouldn’t recommend trying to run a PPC campaign without quite a bit of training, as it is so easy throw money away if you don’t know all the ins and outs). Let’s say you’ve paid a PPC firm $2000 to manage your campaign for the month, and that for every order, 45% of the selling price goes toward manufacturing costs:

$10,000 (net revenue) x 65% (portion of product revenue retained after factoring production costs) – $5000 (click charges) – $2000 (management fees) = -$500 (immediate gross profit)

Oh no! After factoring in your costs, you’re in the negative. Of course, if you consider longer term effects such as likely future repeat purchases by these new customers, not to mention synergies between PPC and other sources of traffic, you’ll get a lot more than the immediate figures indicate. Still, it seems that at this level of spending, you can’t really expect to earn much ROI, if any, up front. Even if you were to bring up conversion rates significantly, the return would be in the positive, but still relatively low.

Increase the Budget, Increase the Returns

Let’s see what happens with a $15K budget. We’ll factor more out of the overall budget for management costs, and assume our firm has been able to at least keep conversion rates steady:

$15,000/month (budget) /$1.50 (CPC) x 1.5% (conversion rate) x $200 (average sale amount) = $30,000 (net revenue)

$30,000 (net revenue) x 65% (portion of product revenue retained after factoring production costs) – $15,000 (click charges) – $4000 (management fees) = $500 (immediate gross profit)

That’s looking a lot better! It’s not a huge immediate profit, but it goes to show how increasing scale can tip ROI in your favor. Of course, if conversion rates are increased, ROI is boosted and more gross profit is ultimately generated. For instance, in the above scenario, if conversion rates were brought up by just 0.5%, profits would increase significantly:

$15,000/month (budget) /$1.50 (CPC) x 2% (conversion rate) x $200 (average sale amount) = $40,000 (net revenue)

$40,000 (net revenue) x 65% (portion of product revenue retained after factoring production costs) – $15,000 (click charges) – $4000 (management fees) = $7,000 (immediate gross profit)

By using formulas like this, and experimenting with different budgets, conversion rates, and CPC, it can take a lot of the guesswork out of what to expect from your campaign. PPC is a bit unpredictable, so any calculations you make shouldn’t be read too literally, but formulas like this can definitely help to give direction as to how much of an investment and what sorts of conversion rates will likely be needed to return positive ROI.

Posted in PPC

When is Social Media a Better Investment Than SEO?

As a small business make sure your web marketing dollars make sense. Photo credit: Tennekis Wiki Commons

In a recent post Rob painted a bleak picture of the SEO playing field for small businesses – that an ever increasing number of small businesses soon won’t be able to compete in the organic search space because of limited budgets and increasingly savvy and well invested competition.

For some small businesses that time has already come.

Take the business owner who was experiencing booming success with his local restaurant. Great atmosphere, cheerful employees, decent food, ample parking, and the aroma of freshly roasting coffee made his restaurant a hot spot. So when he wanted to take his popular fresh-roasted coffee online, SEO seemed the logical route.

If all these people loved his coffee, why shouldn’t the search engines?

Because search engine spiders can’t taste coffee, nor can they see your local social proof, so they instead use complex algorithms to determine who makes it to the top, including the site’s age and authority, and there’s even speculation that well-known brands get an extra boost. Trying to compete as a small business with a relatively new site for competitive words is not an option for such a business.

If Not SEO, What Should a Small Business Do When They Have a Really Great Product?

People can taste coffee, and it’s people, not formulas, that run social media.

Invest in social media. And by invest, I mean invest in hiring an experienced social media firm or consultant to develop a clear and focused strategy, complete with tracking mechanisms for ROI measurement. Once you have that in hand, you can implement the strategy in-house. Not just to save money, but because an effective Social Media strategy really should be implemented in-house by the people who are most passionate and knowledgeable about your product or service.

For most mid-sized to large businesses, SEO should be the first point of attack. It establishes the all-important virtual “location, location, location” on the World Wide Web. For these businesses, social media can supplement, and is often best used for other marketing tactics such as brand awareness, market research, or customer service/relations, but organic search optimization is the best foundation.

For a small business though, social media can sometimes be the best first-line marketing tactic.

How to Know

How do you know when Social Media is your best first investment in online marketing? Here are some clues:

  • You’re a small business with fewer than 10 full time employees.
  • Your site is new.
  • Your site has little or no PageRank.
  • Your product or service area is highly saturated online – do a search for the general term that describes your product or service. If the top 10 results are strong contenders, you won’t be able to touch them as a small business.
  • Your product or service is one of many, but unique or special in some way.
  • Brand Advocate Opportunity – You already have a loyal local customer base that comes to you versus the competition for some specific reason. I.E. you have the best coffee within a 100 mile radius, or your customer service makes people feel good.
  • Your business has a brick and mortar component so that online success will not make or break your bottom line, but will grow it.
  • Your online marketing budget is less than $3-4K.

Warning

Many small businesses falsely think they can handle social media completely on their own. They recruit a member of their staff, usually someone young who is well versed with Facebook or Twitter, and set them loose. Or sometimes the business owner is savvy enough in social media themselves to make a go of it. Of course there are cases of this working rather well, but there are plenty of disastrous cases too. Best-case disaster scenario is an unfocused and ineffective campaign that bleeds time and resources with little to no results, souring business owners on the effectiveness of social media. Worst-case scenario – one major faux-pas can bring your whole business to a screeching halt. It is well worth hiring an expert to guide you, and definitely to have on call if disaster strikes.

How Social Media Can Open SEO Opportunities

The best part of investing in social media first, and investing well, is that it can open SEO opportunities for later. For example, a well-written and interesting blog incorporated into your site can capture long-tail search (less competitive, but less searched for terms), offer fresh content to the search engines for real-time search, and inspire incoming links that boost your PageRank. All of this preps your site to be eligible for investing in SEO later down the line, further boosting your online positioning strategy. Not to mention, if your social media strategy worked, you’ll have the money to invest in expert SEO services.

One Caveat

Are there cases where SEO can work for small business? That really gets determined on a case-by-case basis. It could be that your small business offers something in a generally competitive online marketplace, but fills a certain niche for which long-tail keywords can get you enough traction for success. Most search marketing firms offer free assessments to help you determine your best online marketing opportunities given your site’s current positions, the state of your competition, and your budget.

Can Spending Too Little on PPC Labor Cost You More?

Balancing PPC Labor and Click Costs

The Tug of War between PPC Labor Time and Click Costs

In previous posts I discussed how to allocate investments in SEO, and DISC’s head PPC guy, Dale Webb, recently posted on determining your ideal PPC budget. Here, I try to help you understand that if you spend too little in monthly PPC management, you will pay more in click costs – often more than revenue or profit per conversion.

Think of it: if you divide costs by hourly rate to get labor time, even $2000 a month at a suspiciously low $100 per hour is less than one hour per business day. And think about the work that must be done in PPC (and in shopping comparison site marketing, which is also PPC-driven, except for Google Product Search):

One must

  • write brilliant ads with the discipline of haiku;
  • assess and choose from among thousands of phrase combinations — each with options for exact, phrase, broad, and negative matching;
  • produce ad groupings that maximize quality score and minimize the risk that a few bad ads will spoil the adgroup barrel;
  • marry each landing page text with each ad;
  • track which of several positions produce the best combination of clicks and conversions, for every ad;
  • do split A-B and multivariate tests on landing pages to maximize conversions;
  • report clearly the results, the plans for next month, and the precise ROI;
  • keep reading and learning to stay apprised of the most profitable tactics;
  • and choose and tune many other variables that the search engines allow you to alter.

All of this work must be done by an excellent mind with exceptional linguistic and analytic aptitude, and lots of experience. If you don’t do this work at least as well as your top 10 competitors, you will pay much more in click costs relative to conversions than you will save in labor cost.

Of course the extent and acumen of your PPC competition is a major variable in the calculus of how little labor time you can get away with before you fall below maximum ROI towards negative ROI. But remember that Google’s market capitalization is close to GE’s because 95% of Google’s enormous revenue comes from its PPC, which means few industries are under-investing in PPC now. Increasingly, if a website has mediocre or worse usability (conversion rates), or if a business’s margins are too low, no amount of PPC expertise and time will produce profit.

Having managed PPC campaigns for as long as they have existed, we at DISC have found that $1500 per month in labor (10 hours per month, or 2.5 hours per week) is the minimum labor time – and that’s in industries with poor PPC competition, and after more time up front to set-up the campaign. Average PPC competition requires at least $2500 per month, usually $3500. Of course large businesses often spend upwards of $50,000 per month in labor to achieve maximum ROI.

The substantial amount of labor time required to find, implement, and tune the lowest hanging fruit means that you can’t just dip your toe into PPC to “test” the waters. A valid test must look at the best opportunities in PPC, and ascertaining those opportunities takes highly skilled time – the easy quick pickings have long since been bid up to the max.

If you are among the fortunate few, your resistance to spend what it takes is shared by most of your competition, which means you have opportunity to win profitable business that they neglected. Moreover, because there is a shortage of PPC talent, a gifted (and thus well-paid) PPC manager – who is given enough time — can deliver great ROI even if your collective competition is heavy. Fortune favors the bold – and the smart.

Tips for Determining your Ideal PPC budget Part 1

How much to invest in PPC can be a bewildering task for business owners. We are often approached by companies that already have a PPC budget in mind, and just need us to help determine how to best allocate that budget. Just as often, though, companies have no idea how much they should be spending on PPC, and need some advice. Here are a few techniques we use to figure out a reasonable figure.

Determine your average sale amount. Get an average for the entire year if possible, as to account for any seasonal fluctuations in sales volume. (Note: in this article we’re focusing on e-commerce sites, but the same principles could be applied to a non e-commerce site by assigning theoretical monetary values to whatever actions you’re trying to drive, whether it be a newsletter sign-up, a phone call, or anything else you’re hoping will occur as a result of this advertising)

Estimate conversion rate. Typically PPC, when done right, produces higher conversion rates than most other sources of traffic to a site. And, as the campaign develops, you further qualify through optimization until you’re targeting only the highest-converting traffic. What to expect for an initial conversion rate can be tough to figure out with no previous PPC data to look at as a reference point. So many variables play into conversion rate (ad copy quality, landing page, overall site quality, etc.) Still, most search marketing companies that have been around awhile have handled campaigns in many industries, and may be able to give you an idea based on their past experiences.

Estimate average CPC. Run a handful of the most basic terms that describe your business through Google’s Traffic Estimator to see what you can expect to pay, on average, per click, for your most popular terms. Of course part of PPC is finding the less searched on, more qualified, cheaper and higher converting keywords, but this will work for a rough estimate.

In Part 2, we’ll show you how we can use this information to make predictions about what kind of return we might get under different budget scenarios.

Posted in PPC

What SEO tools Should You Use?

SEO Tools and Tool Sets

SEO Tools and Tool Sets

If you decide to do SEO in-house, what tools should you use? Companies create SEO tools for link bait, leads, and cash flow if the tool is for sale. Those incentives have spawned literally thousands of SEO tools and scores of tool suits, both free and paid. How can you know which to use?

Unfortunately, it takes a lot of time and expertise to (1) quickly assess whether a tool is worth further assessment, and (2) evaluate the accuracy and usefulness of each candidate. For example, spend a few hours looking at free SEO browser ad-ons, and you may find the impressive WOOrank.com tool. I use it regularly for quick snapshots of a site’s SEO health. However, it can wrongly report SEO deficits. You would discover such errors only by doing careful confirmation tests or by running an SEO technical audit by cherry-picking the best of many tools and by manual testing where possible. (I know, we’re in chicken-egg land, for I’ve posited a-priori knowledge of where to cherry pick SEO tools). For another example, WordTracker for SEO keyword research is very useful, but what are its biases and weaknesses, and which of its options should you choose and why, and when do you need to use other tools to supplement data coming from its weaker points?

The fact is that there is no single, simple choice of tool for any part of the SEO process. The best SEO firms constantly evaluate tools, in part by running different ones in parallel, and in part by doing more manual tests to spot check tools that, in the past, seemed to work fine. This takes time and expertise, which is one reason that SEO firms can add value despite higher hourly rates than employees. Of course you can train an employee to get sufficient expertise to evaluate tools, and then pay the employee (or yourself) to take the time to constantly test the tools, but the ongoing need for such tools on the one or two websites you own probably won’t justify the investment in R&D and training.

This case of the micro-economics of selecting and using SEO tools connects to a broader economic trend in search marketing: as the need rises to do SEO completely and correctly to get results, and as the complexity of SEO increases, ever larger small businesses are excluded from effective SEO – and ever more unscrupulous SEO firms swoop in to offer services for prices that will not and do not support adequacy. True, new local search marketing channels are delaying this trend for small businesses serving local markets, but this only slows the trend. There are huge economies of scale in SEO, and I wonder whether this trend reflects a root cause of the world’s growing income inequality.

Bottom line: spend at least 15 hours each for evaluating SEO tools for each of SEO technical auditing, keyword research, and SEO results reporting.

Top 3 Things to Look for when Hiring a PPC Agency

This is a topic that’s been covered in many other blogs over the years, but I thought I’d add my own perspective, especially since it has somewhat changed over the years as PPC Marketing, particularly Google Adwords, has developed. The initial approach a potential PPC firm should take to managing your campaign would vary quite a bit depending on several factors such as type of site/industry, whether there’s an existing campaign, etc. So, there isn’t really a set list of questions that would suit every case. Whatever the situation, there are certain skills you should be sure a potential PPC firm posesses before it is trusted with managing your campaign.

1. Experience
Not nearly enough can be said about this. There is a certain understanding of PPC advertising, and how it fits in and influences other types of traffic, that can only come with years of experience in managing campaigns and interpreting statistics. If your potential firm doesn’t have adequate experience, they are likely to make a lot of trial and error mistakes that a more experienced firm would foresee, causing your campaigns to deliver lower ROI than they should, especially in the beginning. The ads are also the “face” of your company, and if the ad copy is poor, or the landing pages are not intuitive based on the search query, your image and reputation could be damaged for good. Ask how many years your campaign manager has been doing PPC professionally. A manager should have years of experience with all sorts of different sites and all sorts of different budgets. Also, find out how much this person will actually be managing your campaign, or if the majority of the work will be passed on to a less-experienced underling.

2. Progression
Experience without progression is pretty much useless. New features in Adwords are being added all the time, and advertisers who are early adopters can gain a huge edge over the competition, or at least remain competitive if the competition is also using the latest tools and techniques. Evaluating the degree to which the potential firm is progressive, and just their overall level of skill, can be tough without being a professional yourself. However, you can get an idea of how up-to-date the firm is by asking about some new Adwords developments and seeing how well they can explain them to you. It would be very worthwhile for the person evaluating a potential PPC firm to do a little reading on the Google Adwords Blog, particularly posts like this: http://adwords.blogspot.com/2010/12/10-of-our-favorite-adwords-innovations.html. Put the potential firm on the spot; pick a few of those new Adwords features and ask them to explain them to you in plain terms verbally, and whether or not they think any of these features would be useful for your campaign. Or, just ask them, what are some of the latest features in Adwords and how can we utilize them? If the manager doesn’t know about this stuff by now they’re pretty much in the dust, as will be your campaign.

3. Reporting
Reporting should be totally transparent, and you should get some sort of regular, standardized report that clearly shows the current and historical ROI of the campaign. The report should factor in all costs, including click costs and whatever fees are paid to the managing firm. You need to make sure you can easily verify the figures being reported to you, particularly conversions. When dealing with a large amount of data, the figures can easily be presented in a way that really slants things to give more credit to the PPC campaign than it really deserves. Have the firm explain how they will be measuring performance i.e. what analytics package will they use. Whatever they do, you should at least have something of your own that you control, like Google Analytics, set up on your site with conversion tracking. You need to make sure the managing firm will evaluate PPC performance within the context of overall site performance. Sometimes PPC done wrong can not only provide negative ROI itself, but also negatively affect other forms of traffic. When done right, PPC should not only provide positive ROI, but also provide a synergetic boost to other forms of traffic, particularly organic and direct. Make sure the potential firm will be monitoring these sorts of effects, and spend as much time as you can on your own looking at and trying to understand your own stats.

Posted in PPC