How To Measure Search Engine Marketing ROI
by Charles Preston
Published on this site: May 26th , 2005 - See
more articles from this month...
According to the Search Engine Marketing Professional Organization
(SEMPO), advertisers spent $4 billion in 2004 on search marketing
programs and are expected to spend 39% more than that this year.
Search engine marketing appears to be a great way to advertise
but is it right for you and your business? If you are not already
employing search engine marketing(SEM) for you business is there
a way to forecast the return should you decide to invest in it?
Is there a way to measure the results you are getting if you have
already invested in SEM?
The answer is mostly yes. By utilizing data discovered in recently
released research surveys and with the help of a few free online
tools you can put begin to take some of the guesswork out of search
engine marketing ROI.
By using Overture’s free keyword suggestion tool (inventory.overture.com)
you can get an idea of how many times a keyword is getting
searched each month. Another free tool to use is called Good
Keywords and can be downloaded from
www.goodkeywords.com
Let’s say for instance that you are a mortgage broker in the
Denver Colorado area and you are interested in getting more leads
for your business. You have a website and are considering search
engine marketing to bring in some new leads. You get a quote from
a search engine marketing provider who can guarantee top 10 positions
among the major search engines for 6 months for your keywords for
$1,500.00.
The question now becomes is it worth it to you to spend the $1,500.00.
To figure this out we need to look at some numbers.
Berrier & Associates estimate that 65% of all traffic generated
by a search in a search engine will go to the sites listed within
the first 10 results (first page) returned for that search. By using
Overture’s keyword suggestion tool you discover that the term
“Denver mortgage broker” gets approximately 540 searches
a month.
Using this criteria a first page position for “Denver mortgage
broker” would bring you approximately 65% of 540 searches a
month = 350 visitors to your site each month. Having a compelling
title tag in your website’s pages might even boost this visitor
number since the title tag is what appears as the clickable link
in the search results.
The formula we just used would then be applied to all the
other keywords you are targeting such as “mortgage Denver”
which gets approximately 2,600 searches a month or “mortgage
company Denver” with 466 searches a month. A first page
placement for any of those would yield similar results.
So let’s say we just use the “Denver mortgage broker”
key phrase as our example with its estimated 350 visitors a month
for a first page position. You would now need to know what your
website conversion rate is. The website conversion rate is the ratio
of leads or sales you get per visitor amount. The average website
conversion rate is about 1-2% or 1-2 leads or sales for every 100
visitors according to Shop.org.
If your website conversion rate is average then you would expect
on average 2-3 good leads from your site each month for that one
first page listing. Then depending on your sales conversion rate
which is the number of sales per leads you get on average multiplied
by your average sale price you can begin to calculate what your
return might be.
So let’s say as a mortgage broker you make roughly $2k on
each deal you broker and your sales conversion rate is 1 sale for
every 3 quality leads. In any given month then you could estimate
1 sale at $2k out of the 3 quality leads generated from your website
which came as a result of the 350 visitors you got from being on
the first page of Google, Yahoo or MSN for the term “Denver
mortgage broker”.
You paid the search engine marketing company $1,500.00 dollars
for 6 months of first page listings. From one of those first page
listings you stand to gain $2k x 6 months = $12,000.00. That sounds
like a really good return for money invested.
In closing the methodology outlined in this article to calculate
search engine marketing ROI is by no means 100% accurate due to
several factors but it is a good way to get a “feel” for
what you might get back for your marketing dollars. Its also a way
to get business owners to start thinking about how to better track
their e-business.
Charles Preston is an Austin based SEO with over 7 years
of industry experience. Charles is also the President of Click Response
an internet marketing company focused on teaching small businesses
how to get the most out of their internet marketing. For a free
consultation or more information please visit http://www.clickresponse.net
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