Search Engine Marketing
Thursday, October 21, 2004
Are Your Internet Marketing Goals?
“I was expecting sales but I only received a ton of non-converting traffic”. Thought this before?
I heard this just last week from a very capable and skilled marketer after discovering that his sizable investment with a reputable outsourced Pay-per-Click service provider simply failed to meet his goal. Well, let me clarify the term, “failed”. The outsourced service provider didn’t fail they met THEIR goal of “delivering relevant pay-per-click traffic to the client’s website.” The marketer didn’t necessarily fail either; he defined his goal as “receiving pay-per-click search engine traffic to his website.”
So where was the breakdown?
It was in following the conventional thinking that “if I generate traffic, I will correspondingly generate sales”. Each traffic generation channel (like pay-per-click or organic search engines) and the visitors arriving through it will produce varying outcomes for the same website. Therefore, even if your website produces a favorable sales conversion from organic search engine visitors, there is no basis for assuming that another traffic generation channel like pay-per-click will deliver similar or better sales conversion results. “All traffic is NOT created equal”.
So how do you define the RIGHT goal?
Easily – by following these three steps:
1. Define your Most Important Action
All businesses have a “most important action” which their marketing efforts seek to achieve from their website visitors such as sales, leads, content or membership subscriptions or any other “value-oriented” action that increases their financial condition. You must define your “most important action” and use it as a guide for all of your market strategy decisions. This is your “goal”.
2. Consider Your Entire Value Chain
All website value chains have at least two essential and interdependent components that must be addressed to maximize your financial results. The first is “generating visitor traffic” and the second is “converting the visitor traffic”.
TRAFFIC + CONVERSION = POSITIVE FINANCIAL RESULTS
If you consider only one component instead of both (as in the case of my opening example) then you’ll increase your chances of failing to meet your goal. Because all traffic is not equal, each new traffic generation strategy will need to be tested, tracked and maximized to produce a conversion rate that achieves your goal.
Many companies are awfully disappointed with their pay-per-click search engine results yet they never considered enhancing the conversion strategies used to convert pay-per-click visitors to sales. Because traffic generation channels perform differently, your website’s conversion strategies must be optimized to attract, interest, evoke desire and persuade action from visitors.
Also, understand that if you outsource one component to a third party, the responsibility for the other component falls on you. Ideally, if you are considering outsourcing your pay-per-click campaign, hire a company that effectively manages both components - traffic generation and conversion enhancement.
3. Add Measurable Performance Metrics (Fill in the Details)
But establishing a goal (i.e. most important action) and addressing “both value chain components” is not yet good enough. As the saying goes, “the Devil is in the Details”. If you set your goal to “achieve sales” then you need to define what that means as a measurable performance metric. There are many types of performance metrics which measure the effectiveness of traffic generation or conversion separately, like “cost per visitor” or “conversion rate”, but mainly one that considers both interdependently.
Successful marketers use a performance metric that considers both traffic generation and conversion in measuring goal achievement. This metric is called, “cost per action”. It is calculated as follows:
Total Cost of Campaign / Total Number of actions generated by the Campaign
The “total cost” figure should include the advertising cost and the resource cost either from an outsourced third party or in-house staff. While the “total number of actions generated by the Campaign” includes visitor and conversion rate figures:
(Visitors x Conversion rate = Number of Actions).
A target “cost per action” should be a specific dollar figure below your gross profit (defined as, “Revenue – Product Costs”) and your target profit margin objective.
For instance, let’s assume that your product sells for $97, your product costs are $40 and your target profit margin is $35 - your ideal “cost per action” should fall below $22 and not exceed 22% of the sales price.
By following these three steps you will be able to:
Establish measurable performance metrics to determine success or failure of a marketing strategy and determine your return on investment from it. Communicate to an outsourced service provider the “detailed goal” you expect to achieve through your engagement with them. For a pay-per-click campaign, this enables a service provider to calculate bid prices, ad positioning, and bid management strategies to help meet your performance metrics. Ensures that your marketing strategies are focused on your goal and that you’re heading in the right direction. Establishing your detailed goal BEFORE you make any outsourced or in-house decisions is essential. As the old joke goes, “I’m making progress climbing the ladder of success--I just don’t know if it’s leaning against the right wall.”
Today’s Lesson: Define your “most important action”, allocate efforts for traffic generation AND conversion and establish the correct performance metrics to determine success. If you follow these steps you won’t end up “leaning against the wrong wall”.
Friday, October 08, 2004
A Fundamental Overview Of Pay Per Click Search Engines
"Forbes magazine has reported that pay per click ad sales are expected to increase to at least $8 billion by 2008."
The three fundamental core elements that form the basis of a successful pay per click ad program are constant monitoring, analysis, and refinement. Pay per click search engines offer a way to buy your way to the top of search results for any term you wish. With proper management, and a clear focus, pay per click search engines can offer some of the most well targeted and economical advertising on the Internet. Pay per click advertising works through a bidding process, and the ads appear prominently on the results pages of search engines such as Google and Yahoo. The highest bidder for a particular word or phrase receives top placement, and depending on the engine, the top three to five bidders also generally also receive placement on the first page of unpaid search results. Fundamental questions to be addressed when formulating a pay per click search engine strategy include the following: When is the top pay per click bid necessary for highest conversion, and when will bidding for a second or third place position create a more attractive return on investment (ROI)? How can you keep your PPC bids from cannibalizing your search efforts on other (non pay per click) search engines? What percentage of your pay per click budget should go to each search engine? Does either Google Adwords or Overture work better for your particular product or service? Or, perhaps neither one is appropriate from a return on investment (ROI) perspective. It is of critical importance to focus sharply on identifying the search terms that convert most frequently for your particular site, eliminating those that don't perform, and most importantly, calculating and maximizing your return on investment. The cost structure of pay per click is action-driven and each time a user clicks your ad, the pay per click engine deducts the amount of your current bid from your account. Pay per click offers a high level of assurance that your ad is reaching the proper target. Pay per click campaigns, however, are not perfect. Without CONSTANT monitoring, you sometimes risk incurring advertising costs that can spiral out of control, focusing on terms that don't convert well for your product or services, or falling way down in position during a bidding war. PPC advertising can be a great help to a site's success, but only with very close supervision and a thorough knowledge of the unique characteristics of each PPC search engine.
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