In the early days of search marketing, many advertisers mistakenly thought of organic search traffic as free. They would build a website, design the user experience, and sometimes make the basic technical tweaks to be properly categorized by the search engines. The strategy for optimizing organic rankings was mainly "set it and forget it." This put SEO efforts in stark contrast with paid search marketing, which involved relatively large investments that were actively managed and optimized. As the competition for the search audience increased, savvy online marketers realized it was not only possible but necessary to actively manage and optimize both their SEO and paid search programs. This led to the second phase of SEO marketing - active management of organic rankings.
Best practices for organic search emerged. Practitioners started actively managing on-site technical aspects like site structure and meta tagging. They began ensuring appropriate configuration of existing and new content. For example, they started managing the density of attractive keywords in content and proactively developing inbound links to build authority. As a result, SEO efforts have evolved from a technical discipline to a marketing discipline. With this evolution came the need for additional resources and expenditures to support the ongoing content optimization and link building efforts required to maintain high levels of organic traffic. According to Econsultancy, more than $1.5 billion was spent last year to maintain "free" organic search traffic and keep the competition below you on the search results pages.
This brings us to phase three of SEO marketing, the point where SEO efforts must justify their worth and compete for resources with other parts of a successful advertising program. A big takeaway from DOMAINfest, held last week in Santa Monica, was the increasing importance of ROI for SEO campaigns. At the conference, a panel of SEO experts was asked what has changed in SEO over the last year. Their first answer was "SEO is now (finally) being subjected to rigorous demands of ROI and accountability, and is being evaluated just like any other part of a company's marketing portfolio." Combine this with the frequent requests we see from clients and prospects for the ROI metrics of their SEO programs, and it's clear that "free" traffic from organic search and the dollars spent to optimize organic rankings are no longer getting a free pass in the marketing budget process. CFOs are now holding SEO initiatives accountable and demanding to see the return they are getting from all this new spending.
Competitors are spending time, energy, and resources trying to crowd you out of top placements on the search engine results pages (SERPs). If that weren't enough, your CFO wants proof that your SEO program is paying off. So what is the CMO to do? The answer, and good news for most online marketers, is to do your best to measure the ROI of your SEO program. We have seen clients generate millions of dollars in value spending tens of thousands on SEO; therefore, it's likely, even with money spent to actively manage the program, that your SEO program can provide a considerable return.
As with any marketing channel, organic search ROI can be particularly tricky to calculate given that organic rankings are determined by many different factors. Nonetheless, an approximate answer is better than none at all. Here's a basic ROI equation for SEO: number of visits driven by organic search x the dollar value of each visit – the cost of SEO efforts = the dollar return on SEO. Google Analytics can provide the number of unique visits driven from organic links. Most marketers understand the value of each visit (variable margin attributable to Web visits/number of visits) to their website. Optimally, advertisers would track the specific dollar value attributable to organic search traffic. If this is not easily available, the site average is a reasonable substitute. But advertisers must be able to quantify the average value of a site visit before the value of any online marketing can be established.
Lastly the cost of supporting SEO efforts (in-house/outsourced SEO experts, link building, content creation) should be identified. It's advisable to take a cautious approach with regard to cost. Some activities like link building are clearly SEO-oriented. However, site structure and content creation typically have mixed ownership. Many companies aren't evaluating SEO programs properly because they're not connecting SEO efforts with site architecture and content creation decisions, nor are they appropriately attributing these costs to the organic program. Ideally, costs would be allocated based on the total time site architects and content creators spent adjusting the site elements for SEO advantage. If your organization does not track time explicitly, try allotting 15 percent of major site design efforts and 5 percent of ongoing content creation work to the overall SEO program costs.
As the competition for the search audience intensifies, advertisers will be forced to spend more to improve their organic search rankings or find themselves relegated to the bottom of the SERPs. Measuring the return you are getting on SEO expenditures will give the CMO and CFO the confidence they need to invest in this critical source of customer traffic.
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Jonathan was CEO at MediaWhiz until July 2011. He was responsible for guiding strategy and operational execution, including overseeing the integration of the company's suite of marketing services, leading the development of new and unique capabilities, and ensuring the organization delivered better results for its performance marketing clients.
Before joining MediaWhiz, Jonathan was president of Lillian Vernon Corp., where he was responsible for the management of the company and its subsidiaries. Lillian Vernon was sold to a group of investors in July 2006.
Previously, Jonathan was the chief strategy officer of DoubleClick, where he was in charge of setting strategy and overseeing M&A. He began his tenure at DoubleClick as vice president responsible for the company's Internet Advertising Network before being appointed senior vice president of the company's Abacus online division, where he created DoubleClick's data strategy and oversaw development of new online targeting products and services.
Additionally, Jonathan was the executive responsible for developing United Media's original Web businesses (The Dilbert Zone, Snoopy.com, and Comics.com), and was a senior consultant with McKinsey & Co.
June 20, 2013
1:00pm ET / 10:00am PT