Total cost of website ownership - SEO & PPC

• Sep. 10, 2003

So, you have the perfect URL registered, a reliable web hosting company and you have a professionally designed website. So now, you have to market your website in the search engines and directories. This is not too much different than marketing a regular business in your hometown. It will take time and money to get your product/services out in the market to be noticed. A common mistake a lot of companies have is not realizing how much money and time it will take to compete with the already well established top competitors. This article will touch on SEO and PPC issues for your new online (widget) business.

Search vs. Everything Else (A Brief Look)

Search traffic has consistently proven itself to be the highest quality new traffic you can bring to your website. The only traffic that has higher conversion rates is return traffic from previous customers. Studies by Jupiter Media Metrix and the NPD Group have shown that search outperforms traffic from banner and opt in campaigns in any metric you choose, including return on investment, unaided awareness, likelihood to buy and cost per acquired visitor. Generally, these studies have looked at paid search, i.e. Overture. In our own studies, we’ve seen that free search has consistently beaten paid search in each of these metrics.

Determining your Return on Investment

As with any marketing, you have to establish some yardsticks to measure the effectiveness of your campaign. With paid placement engines such as Overture, the pay per click model makes this job a little easier. You’ll have to work backwards using average online sales amounts and visitor conversion ratios to determine the top amount you’re willing to pay for each visitor.

Cost per Click = Avg Sale Amount X Profit margin X Conversion ratio
For example, if your average online sale is $100, you have a 25% profit margin and you sell to one of every 100 visitors, your cost per click ceiling would be 24 cents. This simple formula will serve as a starting point for setting per visitor budgets.

For engines that charge paid submission fees, return on investment is a little more difficult to budget for. Regardless of the payment model, it’s essential that you track visitors, conversion rates and average sales originating from various search sites. This is the only way you can gauge the effectiveness of your campaign.

The Different Paid Options

Paid Placement: This is a straight bid for position, and can be found on engines such as Overture, FindWhat, Kanoodle and Google’s Adwords Select. In it’s simplest form, paid placement means you bid on a per click basis for your keywords. The higher the bid, the higher you rank. Overture further sweetens the pot by rolling its top rankings over to its search partners, including Yahoo, AltaVista, MSN and others.

Paid Inclusion: Here you’re paying for a search engine to ensure your site will remain in it’s index. Inktomi, Teoma, AltaVista, Fast and Lycos all have paid inclusion charges. You pay a set price per URL (which means each individual page on your website) per year, ranging from $12 for Lycos and $30 for Teoma to $39 for Inktomi and AltaVista. Your paid inclusion fee does not guarantee position.

Express Submissions: This is a fee charged by the two main directory based portals, Yahoo and LookSmart. Similar to paid inclusion, this fee ($299 US per year for Yahoo) does not guarantee position, but does ensure that an editor will review your site for inclusion. While inclusion into the directory is not guaranteed, your chances of being included are quite good.

Setting Your Priorities for the Paid Options

Now it’s time to plan and start placing your budget. As you go through your options, start with the flat inclusion fees first. You want to put your money into the search portals that will generate the most traffic. Yahoo is still by far the most popular directory, the hard costs is $299 per year. Yahoo is a must have for all websites. It still provides a website with a great link back with helping the sites link popularity.

For paid inclusion programs on spider-based sites, Inktomi (featured on MSN, iWon, Netscape and other partner sites) is the clear winner. After, in order of priority, consider the paid inclusion programs on Lycos, AltaVista and Teoma. While it will be more difficult to track your return on investment on results generated from these sites, I’ve found that the cost per click of visitors coming from the unpaid search listings is far less than you would normally pay on Overture or one of the other paid placement engines. The most popular crawler based engine, Google, has resisted the urge to introduce a paid inclusion program. Make sure you take advantage of this and submit your site to Google's index.

With pay per click options, Overture offers the most extensive coverage, reaching 80% of users through their search partner network. Looksmart currently has PPC model now with a flat rate per click for the first 5000 clicks. Looksmart provides results for MSN currently in the Web Directory section. This alone is a good reason to include Looksmart into your budget. Google’s Adwords Select program also gives you a pay per click option.

Include Search Engines in Your Budget

Don’t overlook search engines in your online marketing budget. Any study that’s been done comparing search listings to other forms of online marketing have always shown search to be the clear winner. And while it’s not free anymore, when you compare the costs to a banner or pop up campaign, search engine marketing is still an absolute bargain.

As you probably figured out, ROI (return on investment) is a must for your website marketing strategies. In order to know what keywords/phrases are working for you, you will need to know the ROI for each word/phrase. In the beginning, PPC is needed to start driving traffic to your site as you wait for the search engines and directories to list your site. Once the search engines and directories have your site listed, it is still advised to have a combination of SEO and PPC strategies. You will always have to keep track of your ROI to determine where your money can be best spent.

This necessarily is not the end, but the beginning of your online marketing. I’ve only really touched on the basics. There are many other issues to consider from month to month, such as the ever changing search engine algorithms and the constant need for link building to just name a few. It is important not to get discouraged if it does take longer for your website to achieve those desired rankings. It is important to have patience when dealing with the search engines as it can take months for certain engines to show the changes with regards to rankings.

I tried to keep this article short, but there are too many issues that needed to be mentioned.

Gerard Manning
Searchengineposition, Inc.
Search engine marketing company