SEO is growing up. As the industry has stumbled forward and is being taken seriously by more and more people, including potential clients, there has been more and more demand to deliver on the bottom line. At the most recent search engine strategies conference in San Jose, three letters were repeated in almost every workshop and forum. ROI. Enough of the vague and unrealistic promises. Now clients actually want SEO consultants to deliver real visitors that will take action and drive new sales. The SEO industry is being held accountable for its actions.

Building a Better Benchmark

In the early days of the SEO industry, there was no real benchmark used to define success. Everything was based on rankings, with little thought given as to what those rankings actually meant. Of course, a ranking was only as good as the keyword phrase it was achieved for and the search engine it was achieved on. So, a high ranking for an irrelevant term on a secondary engine with little traffic potential might be considered just as great an achievement for an SEO company as a ranking for a highly relevant, high traffic term on the web’s most popular search portals. When we started in the SEO business we found this extremely frustrating and so introduced our Visibility Index as a first step towards quantifying rankings.

Although the Visibility index tried to account for the differences between engine popularity and the actual ranking itself, it still missed the one key component. What we overlooked, along with everyone else in the SEO business, is the fact that the ranking in itself is irrelevant. What’s important is the traffic that ranking can generate and, ultimately, the revenue that is realized from that traffic. It all comes down to bottom line. Two years ago, most website owners didn’t even check their visitor logs regularly. Today, wise website owners are demanding up to the minute stats about their traffic, where it’s coming from, how much it cost to obtain that traffic, and what the traffic is doing once it gets to their site. Are they buying, browsing or just saying good bye? Extensive bottom line analysis, long a fundamental part of traditional marketing, is now moving online.

Search vs. Everything Else

The fact is, search traffic has consistently proven itself to be the highest quality new traffic you can bring to your website. In fact, 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.

These results aren’t really a surprise, when you consider the nature of search traffic. These are potential consumers that are actively looking for the product or service you have to offer. They’re leads that are ready to act. All you have to do once they find you on a search engine is make the right impression and provide the right solution at the right price. Do all three and you’ve got a new customer.

Yet, despite the numbers and the common sense of search, it’s a marketing avenue that’s overlooked or under utilized by the large majority of website owners. Case in point. This week we were doing some analysis for a major manufacturer of dental care products. They had been spending hundreds of thousands on an online campaign to promote their teeth whitening strips. The campaign was a banner and opt in campaign aimed at a market 25 to 45 years old, upper income. The agency that planned the campaign had done their homework about the demographic segment likely to buy the strips and had diligently purchased lists and placed banners on sites that were likely to attract this type of consumer. Based on tactics learned from the world of traditional media, they had covered their bases.

But they had totally ignored search. Every month, over 25,000 people are going to search engines and looking for sites that would provide them information about teeth whitening strips. The site of this manufacturer was no where to be found on search engines. In their rush to attract possible buyers, they had forgotten to lock in the sure bets with an effective search engine strategy. I wish I could say that this is an infrequent occurrence, but it’s not. And the larger the company, the more likely it is to happen.

PPC begat ROI

In the early days of search, there wasn’t much call for ROI tracking. If a website owner did their own search engine optimization, the only cost was their time. Any traffic that came from search listings was a bonus. Because the traffic was free, there wasn’t a compelling reason to measure the return on investment.

Then, along came pay per click. With the growing popularity of Overture, there was suddenly a cost associated with search traffic. What’s more, that cost could be significantly more for some search terms than others. Suddenly, it became more important for the search marketer to know exactly how each term was performing for them. For the first time, search was being looked at as an online advertising expense.

A Welcome Challenge

As website owners become more aware of search, they also become savvier about establishing metrics to measure the effectiveness of their online marketing. The yardstick had been developed and marketers now wanted to apply it to all their online marketing.

There was just one problem. It’s relatively easy to measure traffic coming from an online banner or opt in e-mail campaign. Overture and other pay per click providers also provide reports showing the amount of traffic being generated. If you use a sophisticated web analytics program, you can identify this traffic coming from these sources and track the actions taken once they get to your site. In this way, you’ll be able to determine conversions and calculate your return on investment. But with traditional search, it’s not so easy.

First of all, through existing traffic analysis programs, it’s very difficult to sort out paid placement traffic coming from Overture or Google’s syndication partners from the traditional traffic coming from those partners. And web analytic solutions generally don’t provide the level of search engine traffic reporting needed to be able to identify traffic sources and track that customer through their visit to determine conversion rates and ROI.

Tools for Tracking ROI

If a site owner was determined to track all traffic and measure ROI, the solution would be quite costly. First of all, you’re looking at a high end web analytics program such as Hitbox Enterprise or Webtrends Live. These typically cost anywhere from a few thousand to several thousand dollars a month. Secondly, to sort out banner traffic traffic, you may have to use a supplementary solution like DoubleClick’s Dart tracking. Add a few more thousand to your monthly budget. And, unfortunately, you still don’t get the report you need to compare ROI on all your traffic sources.

I’ve run up against the same frustration time and again over the past few years. Finally, it got to the point where we’ve built our own solution, called Traffic. I don’t want to turn this column into an advertisement, so if you’d like to know more, visit www.septraffic.com and contact us for a demo. Suffice to say, Traffic provides an elegant and relatively inexpensive solution if you want to track ROI from all your traffic, including search.

Determining ROI

If this column has inspired you to start calculating the bottom line from your website, there’s a little homework you’ll have to do. First of all, you’ll have to determine what a conversion is for your site. These are the “action” events you want a visitor to initiate. It could be filling out a form, buying an item, e-mailing you for more information, or just capturing their name and e-mail for further contact from your sales team. Once these events are defined, you can then calculate conversion rates from your site.

In order to calculate ROI, you’ll also have to determine what your closing rate is from web generated leads, and the average sale originating from an online lead. This is a little trickier for some than others. If you’re an online retail site, your sales reports should provide you with all the numbers you need. But if the purpose of your site is just to capture leads so you can begin building a relationship, it will be much more difficult to determine these numbers.

Let’s look at one case. An online bank has decided that they want to attract potential new customers through their website. They’ve defined 3 conversion triggers:

1. Visitors entering their email and preliminary contact information in order to download a PDF document outlining the advantages of online banking and information about mortgages and consumer loans.
2. Visitors requesting a credit needs analysis from a bank representative
3. Visitors joining an email newsletter subscription list.

Obviously, these visitors aren’t buying anything online, so there’s no easy way to determine the average revenue generated per closed lead. The bank would have to look back at past numbers and try to determine what the average value of what a new customer is worth to them. Then, they’ll have to determine average closing rates for each of the three types of conversions. In the beginning, these rates may be an educated guess, which can be refined once the program is underway and tracking is in place.

Once the numbers are in place, conversion and ROI analysis can take place on the website traffic coming to the banks website.

By the way, for most website owners, these calculations will be a new exercise. If you’re working with an online marketing consultant or search engine marketing firm, ask if they have experience in helping you pull together these numbers. If they’ve never helped a client with ROI analysis, ask why not. This is a potential red flag indicating your marketing consultants may not be measuring success the same way you do.

Build It, Bring Them, and Make Them Buy

Ideally you’re looking for an online marketing partner that will help you in four different aspects. You want someone who can offer advise on building a more effective website, who can help bring quality traffic to that website, who can help you track and measure that traffic, and can work with you to ensure that traffic does what you want it to do once they get to your site.

Look for a partner that’s willing to work with you over the long term to make your site continually more successful. This isn’t a one shot solution. Your online presence should be a priority in your business and will need ongoing monitoring and adjustments.

Help of this kind usually doesn’t come for free either. You wouldn’t expect to buy television or radio advertising for free. Don’t expect it from a reputable online marketing partner either. Recognize the value that a good partnership can bring you and budget for it accordingly.

It all Comes Down to the Bottom Line

Every decision you make in your business ultimately comes down to the bottom line. Does it add to the value of your company, or detract from it? Any decision regarding your website should be no different. Take the time to define the success metrics you’ll use and apply them to every aspect of your website. It’s taken a long time for this type of measurement to be applied to search engine marketing. I believe it’s long overdue. Every time we’ve done it, search has consistently outperformed any other form of marketing. Bottom line analysis can only be a good thing for the search engine marketing industry.