Maximizing ROI On Your SEO Investment

More and more businesses are realizing the importance their web site plays in their overall marketing strategy. They are also realizing the impact of organic search rankings on branding and sales for their business. And this is creating demand for SEO talent to help them improve their position in web search.

Normally, this is a good thing for the business (and, of course, the SEO). A talented and hard working SEO can bring good gains to a business. For example, if a web site is already producing $500,000 in sales before the SEO gets involved, and their efforts result in those sales increasing to $1,000,000, then there is plenty of room for paying the SEO something for their work.

Unfortunately, it does not always happen quite so simply. It can happen that the business results don’t follow the SEO work, even if the SEO is very competent, and diligently does a good job.

Sometimes this happens because the company does not give the SEO the support they need. For example, the SEO initiates a link building campaign that they have agreed upon with the client, and the client is expected to develop content to support that campaign. If the client company does not follow through on that, the SEO ends up not being successful.

There are many of these types of scenarios, but let’s assume that the client company provides all the required support and think a bit about how it still might happen:

Poor focus. Many times I get in these conversations where the client is concerned about growing a weak part of their business. For example, let’s imagine that they have 3 product areas, each operating at 30% margin. One of them produces $1M in revenue per month, another that produces $200,000 per month, and another that produces $5,000 per month.

So the client focuses the SEO on the $5,000 per month product line, and after 6 months the SEO has done a fantastic job and scaled revenue by 4x. Client sales have increased by $15K per month as a result, and the additional margin dollars are $4,500 per month. This is not a lot of additional margin to the bottom line in return for the investment.

But what happens to the margin dollars to the company if they grow the revenue of the $1M per month product line by 4x? Plenty of money to pay the SEO.

This does not mean that companies should not invest money in SEO on weaker parts of their business. However, it is important to realize the the dollar return on that investment is likely to take a long time to materialize, so it should some from a “strategic” part of the budget, instead of the “operational” part.

Another example of this thinking is the SEOs search engine focus. Periodically clients ask us to focus on Yahoo and Live Search as our primary tasks for SEO work, because their Yahoo and Live Search revenue is far less than they see indicated by market share statistics that get published by companies like comScore.

The problem is the estimated market share of the 3 engines: Google (65-70%), Yahoo (15%), Live Search (5%). So just as before, would you rather we double the Google traffic or focus on the other two?

Note that in principle, a solid SEO strategy should cause increases in all 3 search engines. But, there are some things that can be done a little differently for Yahoo and Live Search, and I would suggest that you pass on them and focus on growing the larger opportunity.

Not enough opportunity. In this scenario, the SEO knocks it out of the park, and the increase in search rankings is great, and the company dominates on every term they are pursuing. But not enough sales result. How can this happen? If the opportunity the SEO focuses on is too small.

So let’s discuss an example, using a small business that operates a pizza shop in Seattle. The goal of the company is to dominate on the term “Seattle pizza.” The SEO does a great job and gets the company to number one on that term.

Unfortunately according to Wordtracker, Seattle pizza gets 7 searches per day. That equates to 210 searches per month. Even with a 20% CTR (42 visitors), this may result in the sale of one extra pizza per month. Not a lot of money to pay your SEO there.

So, two main takeaways from this:

1. Focus, focus, focus. Focus your SEO efforts in the places where you will get the biggest bang for the buck. No point in throwing money away after all. And as I said before, if you decide to invest in a new product line or business, just realize that the financial returns may take some time to achieve.

2. Set goals and measure. You need to measure the results of your SEO investment. This starts by creating a baseline of the traffic and revenue from organic search. Then overtime you can measure how that grows. Better still, when you get started set some goals. While any competent SEO will tell you that predicting results is impossible, you should still set goals.

Eric Enge is the president of Stone Temple Consulting, an SEO consultancy outside of Boston. Eric is also co-founder of Moving Traffic Inc., the publisher of Custom Search Guide. The Industrial Strength column appears Mondays at Search Engine Land.