Pay Per Click Search Marketing

SEO vs Adwords
SEO vs Adwords How can you tell if your marketing strategy is working?

SEO vs Adwords

We are going to compare a typical choice by a business owner. To spend an advertising budget on SEO or on Adwords. To simplify the example we make some assumptions -:

This example is based on an average $11.20 cost per click on the term "Financial Advice".
We look at a Conversion Rate of 5, 10 and 20 to generate 1 unit of sale.
We assume a consultation costs $275 so we can measure the success.
It is assumed that the $500 per month SEO generates 100 relevant click-throughs.
Based on the simple assumptions we will generate a decision tree analysis (3 scenarios 5 -10 - 20) with the middle value assumed to be the most likely outcome.

Decision Tree Analysis
Decision Tree Analysis

We are not going to look at fixed of variable costs however is does not take long to realise hiring a bookkeeper would allow better decisions.
We could also compare one SEO to another or one Adwords person to another however after looking at these numbers you can perform those calculations.

SEO vs Adwords

Marketing Cost Per Unit

By determining the marketing cost per unit (MCPU) of your marketing you can compare whether it is effective or not.

Formula:

MCPU = EMT / Ut

Definitions
MCPU = Marketing Cost Per Unit
EMT = Total Marketing Cost in Time Period
Ut = Total Units Sold in Time Period

How do you tell if your marketing strategy is working?
Your cost per unit of your product should decline as you spend on marketing.

SEO vs Adwords as an example

SEO $500 per month (100 relevant clicks / 5 = 20)
units sold 20 * $275

$25 MCPU

Adwords can confuse this because a click is not a sale

hence "Financial advice" = $11.20 per click but it takes 5 clicks to get one sale. (probably a lot more)

$1500 per month = $56 MCPU

26.79 units (1500/$56)

So the equation you really need to know when you spend money on an adwords campaign is -:

Is my website a good enough performer to convert clicks into sales?

How much profit across 3 scenarios

Marketing Monthly Spend Profit CR 1/5 Profit CR 1/10 Profit CR 1/20
SEO $500 $5000 $2250 $875
Adwords $1500 $5867.25 $2182.25 $205

*comparison assumptions SEO generates 100 clicks with a $500 spend, Adwords PPC $11.20 (per click) $1500 spend per month the service is a $275 (unit)
**Example calc SEO $500 per month (100 relevant clicks / 5 = 20)
units sold 20 * $275 = $5500 (Profit $5500 - 500) $5000

Now you know why I offer $200 per month SEO plans to clients. Without detailed analysis as we have attempted here you could be spending too much.

Pay Per Click Search Marketing

Pay Per Click Search Marketing is where you pay Google for a sponsored position. It is a bidding system and also rewards ads that get clicked on more often by placing them higher in the queue.
I prefer my clients to engage my SEO services to get high in organic search results that are free.
In some cases it is useful to use pay per click. One good example is when you have just launched your site and pretty much no SEO can do anything immediately. Sometimes you need to test whether your site design is effective.

Pay Per Click campaigns e.g. Google Adwords can be great for determining whether visitors are reacting positively to your site. By spending $100 on a small campaign on your keywords you can measure your return and determine if your site design is working.
Pay per click is good for seasonal items. There has been some reports that having both an organic presence and pay per click can increase response rates.

Saving money on Google Adwords

If your site performs better than your competition it costs you less to market your site using Google Adwords.
You pay the same as your competition but the % of successful results are higher.

The difference between an effective site and an ineffective site over 1 year

Bounce Rate Clicks per month Avg. Cost Per Click Conversion Rate Value Added per year*
90% 200 $3.20 1/200 -$5280
50% 200 $3.20 1/20 $16320

* Value added per year is assumed at the rate of a $200 service. Hence it is assumed we are marketing a service eg a Building Inspection that costs $200
Check our glossary of SEO terms to understand some of these terms.
Note this is one scenario accurately documented to illustrate how you can easily pay too much in Adwords largely because of the ineffectiveness of your site.

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