The latest Site Reference newsletter has been released. The featured article by Jerry Bader is titled “SEO ROI & The Conversion Rate Dilemma”. [Site Reference Newsletter]


The latest Site Reference newsletter has been released.

SEO ROI & The Conversion Rate Dilemma

by Jerry Bader

What do legitimate search engine optimization firms charge? Like most things involving the Web, prices are all over the place but if the price is extremely low you can be assured that the quality of the service will match the price.

If you do a search for SEO pricing from reliable search engine firms you will find that although prices vary greatly fees of $2,500 per month on an annual contract ($30,000 per year) are not uncommon. Of course some firms will charge less and others will charge a great deal more depending on where they are located, the size and condition of your website, and exactly what services you want them to provide.

Are SEO Costs Worth the Investment?

So what do you get for your $30k ante? Legitimate SEO companies will provide things like target market analysis, keyword analysis, content massaging, code modifications, link implementation strategy, and metric analysis.

And what happens when Google changes their algorithms? Well you guessed it. You have to ante-up again and the addiction continues. Search engine optimization has become the crack-cocaine of Web-based businesses.

Keep in mind search engine optimization’s main goal is to increase your visibility and ranking in search engines which assumes more traffic to your website; but the leap from visibility to traffic to sales conversion is higher than you think. The assumption that better search engine visibility and more traffic automatically generates more sales is faulty logic.

Even if increased search engine visibility produces more traffic to your site and even if your website contains genuine content; if the presentation of that content doesn’t engage the viewer quickly and if it doesn’t hold the visitor’s attention for two to three minutes with a compelling and even entertaining presentation, then your chances of converting that visitor to a customer are minimal.

How Much New Traffic Is Needed to Pay for SEO?

Let’s say your search engine tactics actually work and they not only increase your search engine ranking but also drive tons of traffic to your site. With realistic conversion rates at about 2-3%, how much traffic do you have to bring in to actually pay for the SEO expertise.

Based on a $30K annual investment in SEO and a 20% Net Profit you must generate $150,000 in new sales just to pay the SEO fees. And at a 3% conversion rate and an average sale amount of $100 per transaction that translates into 50,000 unique new visitors per year to your site just to pay for your SEO strategy, and you still haven’t added one cent to your bottom line. You can do the math.

SEO Investment Break-Even Formula

SEO Generated Unique Traffic Break-even = SEO Cost / Conversion Rate x Average Sale x Net Profit Percentage.

Determining Your Conversion Rate

Every business has a different Average Sales Amount and generally speaking it is safe to assume the higher the Selling Price the lower the Conversion Rate. In order to figure out what your Conversion Rate is you have to do a little more calculation. Lets say a company brings in a total of $150,000 in Web-Sales and attracts 25,000 Unique Visitors per year and has an Average Sale Price of $395.95; their Conversion Rate would be 1.5%. What’s your Conversion Rate?

Conversion Rate = [(Total Web Sales / Unique Web Traffic) / Average Sales Price] x 100

To test the formula, we can check the original example where we have a given Conversion Rate of 3% to see if we arrive at the same rate:

CR = [(150,000/50,000)/100] x 100]

Conversion Rate = 3%

The Meaning of It All

After calculating your own numbers, different readers will come to different conclusions. People seem to be mesmerized by complex statistics and bean counter analysis but the hidden meaning behind all the number crunching and mathematical machinations seems clear: if you want to make more money from your website the trick is not where you appear on a search engine or even how many unique visitors you attract to your site, but rather how many of these visitors you convert into customers. If you have a marketing budget it should be spent on conversions; and conversions are not the primary concern of search engine optimization. What you really want is a strategy that will increase conversions.

How Do You Increase Conversions

MarketingExperiments is a research group lead by Dr. Flint McGlaughlin that studies and analyzes these kinds of Web-related issues. In a recent study entitled “Optimizing Your Landing Pages”, they came up with a formula for determining conversion probability. Here’s the copyrighted MarketingExperiments formula: Conversion Probability = 4(Level of Motivational Matching) + 3(Clarity of the Value Proposition) + 2(Effectiveness of the Incentive – Level of Sales Friction) – 2(Conversion Process Anxiety).

I already have a headache, but here’s how they explain it in more digestible terms: “… the highest performing Landing Pages are those that match exactly the Motivation of the customer. After Motivation, the clarity with which you express the Value Proposition is the most important factor in determining whether a customer buys from you or not.”(c) Copyright 2007 MarketingExperiments, LLC, You can visit the MarketingExperiments website for more details on their research.

I prefer an even simpler approach to increasing conversions: feature a website presentation that resonates with the needs of a qualified audience and compels action by providing a solution to those needs. Repurpose that presentation in affordable and no cost venues that drives even more meaningful qualified traffic to your site. Easy to say but hard to do, or is it?

What you need to determine is exactly what needs your audience craves and how best to engage their attention long enough to deliver a story that positions your offering as the missing ingredient required to fulfill their desire and ambition.

The Answer and The Future

The answer to delivering this kind of presentation on your website is video that features professional presenters delivering focused, well-crafted messages that motivate action and embed in your visitors’ memory. If done right, these videos will resonate with the emotional and psychological factors that trigger human desire and motivation. Like it or not, it is the future of Web-marketing.

Google, Yahoo and all the other search engines understand that the Web has become a far more sophisticated delivery platform than it used to be. Methods are in place to delivery not only video, audio, and multimedia, but also to index and tag it for relevance. For when all is said and done, search engines are in the relevance business. If they can’t deliver relevant, meaningful results they are out of business, and no search engine optimization trick, scheme or formula is going to stand in their way.

Those who truly understand the shifting momentum of this reality are already adapting to this new Web-video paradigm – the question is are you?

About Jerry Bader

Jerry Bader is Senior Partner at MRPwebmedia, a website design firm that specializes in Web-audio and Web-video. Visit http://www.mrpwebmedia.com, http://www.136words.com, and http://www.sonicpersonality.com. Contact at info AT mrpwebmedia DOT com or telephone (905) 764-1246.

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