Studying Pay-for-Position Campaign Results

  |  December 13, 2000   |  Comments

There is never any one right solution when it comes to running a good SEO campaign, but pay for position could be a vital component.

The latest trend in generating search engine traffic seems to be the purchase of top listings on pay-for-position search engines, namely GoTo.com. Here are results from two case studies I've solicited for this column.

The results represent both the high and low ends of the spectrum on pay-for-position search engine campaigns, further strengthening the case for careful, daily monitoring of your account.

But before presenting the results, here are some variables to consider:

  • Suitability of the web site and its offering on the Internet

  • Functionality of the web site and ease of navigation

  • Popularity of the industry sector or niche audience

  • Brand and value of the offering, competition, or industry saturation

  • Tracking and ability to document ROI

  • Pay-per-position engine(s) and key phrases used

  • Time of year (if seasonal), time of month, or time of day

  • Comparisons with non-pay-per-position engines and directories

Now that the variables have been established, I want to point out that the following case studies are only primitive findings in a very complicated and sophisticated environment. I'd also like to mention that the individuals who volunteered the foregoing data have requested anonymity. They'd rather not tip off competitors about their budgets.

Case Study No. 1

This gets a thumbs up for pay for position. The ad spend was $5,250 bidding key phrases at GoTo.com. This resulted in a total revenue of $15,914. The client prefers to keep industry and web site information anonymous.

The web site generated 10,043 reported clicks averaging 52 cents per click. The conversion of these clicks was about eight-tenths of one percent, resulting in 81 orders. The average order was $196, much more than the $125 anticipated for first-time shoppers.

By the time we factored in the cost of goods, return rates, variable operating costs, etc., the result was a $14 contribution per order, which was considered successful.

    In Summary:
    Cost per click: averaged 52 cents
    Cost per action: averaged $68.81
    Return on investment: $1,134 or 7.1 percent (not bad)

Now, if the client were to ride out the holiday season, advertising all the way through December, we don't believe this campaign would remain as profitable due to the escalated bidding. The marketing manager's goal was to get in and bid a reasonable amount, maintaining top-three positioning on both relevant and popular terms early in the buying season. As the marketing manager knows, by maintaining top-three positioning, the web site also receives a tremendous amount of exposure through AOL and other partners.

Case Study No. 2

This gets a thumbs down for pay for position. This client wouldn't reveal how much was spent and was disappointed with the overall results to date.

    In Summary:
    Cost per click: averaged $1.80
    Cost per action: averaged $46.69
    Return on investment: $0 or 0 percent (not good)

Both these examples attest to the value of considering the list of variables above and the necessity for managing a tight SEO campaign.

Yet another reader wrote to say: "Our ability to get on search engines has been woeful. We are now considering a listing deal on a $2 pay-per-click deal. Compared to the cost per click we've actually gained from buying banner ads, when we convert the level of success through from CPM to CTRs, this is actually not too bad."

Clearly, there are several variables to consider when getting involved with any form of advertising. As John Wanamaker once said: "I know half the money I spend on advertising is wasted, but I can never find out which half." (As quoted in Martin Mayer's "Whatever Happened to Madison Avenue? Advertising in the 90s.")

Here's a case where the buyer is happy -- he must do a lot of mailings: "I get an average of 1,000 targeted visitors through GoTo.com every day for an average price of 34 cents, the price of a stamp!"

Every SEO campaign is different and requires specific measurable results that should be monitored to justify continuation. There is never any one right solution, such as pay for position, in a good SEO campaign. Each SEO campaign requires several components, and pay for position could be one of these components. The best solution is an integrated SEO plan with new strategies and tactics deployed every month.

The best SEO companies are those that allocate a portion of your campaign to include all the options related to good performance. Some options are Yahoo's Business Express, LookSmart's Express Submit, pay-per-position (GoTo type) campaigns, and paid Inktomi content inclusion. SEO is quickly metamorphosing, but you'll get the latest information here.

In coming weeks we'll get intimate with GoTo's Fraud Squad, LookSmart's Express Submit, Ask Jeeves Editorial Guidelines, and a lot of very cool stuff. Until then!

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ABOUT THE AUTHOR

Paul J. Bruemmer

Paul J. Bruemmer is CEO of Web-Ignite Corporation, a search engine optimization (SEO) and positioning provider. Founded in 1995, Web-Ignite has helped promote over 15,000 Web sites and was recognized by ICONOCAST as one of the top 10 most reputable SEO firms. Services include optimization, submission, registration, positioning, monitoring, maintenance, paid-inclusion, and paid-placement management for fixed monthly fees. Recent client testimonials report search engine traffic increased from 150 to 500 percent.

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