Monday, October 10, 2005

The Business Case for SEO

It’s interesting how potential clients have preconceived notions about which aspects of search engine marketing have the most value. In fact, they tend to fall into two camps that are 180° apart. The first camp believes completely in the value of pay-per-click marketing (PPC). It’s easy to understand why. PPC provides immediate and measurable benefits. The ROI of PPC marketing is obvious. This group doesn’t understand why it’s necessary “to bother” doing SEO.

The second camp believes the only way to go is SEO. Clicks are free and the branding benefits of high rankings have been well documented.
The right answer is that they are both valuable. Each has its benefits and when you can afford to, you should implement both.

Pay-per-Click
PPC makes sense if you want immediate benefits and like the idea of paying for performance. SEO provides branding benefits and longer-term will provide an ROI that is compelling. But unlike PPC, SEO revenue results aren’t as directly measurable and manageable.
Pay per click (PPC) gives you the ability to have complete control over your search traffic. With PPC programs you select the keywords and write the listings. You control where you’re listed and what the listing says. You decide what your budget is and can adjust your spend rate based on results or events (e.g. announcements, promotions).

By tracking results from a PPC campaign, you can build up a knowledge base with respect to your business, including which messages perform the best, which search terms have the best conversion rates, and what destination URL is best for specific users to land on. Over time, this knowledge can help you to improve and define your business.
One of the greatest attractions of PPC is the ability to easily track clicks and costs allowing you to understand your ROI from a specific marketing initiative. This gives you confidence to spend money and drive volume. You may have thought that spending $5,000 a month on a PPC campaign is way outside your budget, but once you measure the ROI, you may realize that it’s well worth the investment.

Search Engine Optimization
So, if PPC is so great why bother with SEO? Basically, because you will be missing out on a large number of potential clicks. How large? A number of recent studies have demonstrated that there are still a lot of users that do not click on the "paid" listings but rather will search through the regular editorial search results. The accompanying chart shows that 60% of the search users prefer (some exclusively) organic over paid listings. The only way to get optimized (high) rankings in these regular editorial results is through an effective SEO program. In most cases, once you have good positioning in the regular search results, you will continue to receive “free” traffic. Again, based on data from a number of marketers the increase in traffic due to SEO averaged 73%. Consider search engine optimization the same as you would word of mouth advertising or public relations. It’s exposure that comes with a very high degree of credibility and trust. Traffic coming from traditional search listings tends to have high conversion rates.

There’s another advantage to traditional search listings. They are considered unbiased and non-commercial. Traditional search performs very well at certain points in the buying process. When consumers are gathering information about a purchase, they show a marked preference for traditional search listings. When they are ready to buy online, they seem to have less bias against paid placement listings and their likelihood to click on one of these listings increases.

The Dollars and Cents of SEO

Perhaps the most compelling reason not to exclude SEO from your online marketing strategy comes down to dollars and cents. In an attempt to quantify the business case for SEO I have gone back and done some analysis on three recent SEO engagements and the results they achieved. I chose ecommerce clients that we had optimized and reviewed their average sales before and after SEO was implemented. In two of the situations the only change made was the optimization of the site. In another the optimization occurred at the same time we implemented a PPC campaign. In the first two cases the store sales rose 64% and 75% after the SEO was implemented. In the third case the store revenue actually went up a staggering 169%, but if you back out the sales that were a result of the PPC campaign, the store revenue that could be attributed to SEO improved by 49%. In other words, the average improvement in store revenue that was apparently due to SEO was 62%.

Can we be sure that all of this was a result of SEO? No. There could have been product, seasonal and other effects that contributed. But I think it's safe to say that there was a significant increase that resulted directly from the SEO. The bottom line: search optimization has a real and measurable impact on traffic, conversions and revenue (or lead generation) improvement. Given that these clicks begin to approach “free” after amortizing the cost of SEO over time, the ROI for SEO is compelling. Added to the branding benefits no marketer or business owner should doubt the value of search engine optimization.

About the Author
Scott Smigler has been an evangelist for a serious, ROI-based focus on the online channel since he founded Exclusive Concepts (http://www.exclusiveconcepts.com) in 1997.

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