You may wonder why I’m talking about organic growth of a website. Well, there are two reasons; 1. I’m a big fan of growth within the organic listings, and 2. Organic growth in plants uses no chemicals. In SEO I’d call “chemicals” black-hat techniques.
Organic Is Cheap!
Organic listings are the listings in the search engines that show up in the middle of the page as highlighted in the picture below. Organic listings have the highest potential return on investment (ROI). Searchers can click your organic listings ad infinitum and your costs don't increase. You aren’t paying anything for that individual visitor except what you’ve invested in SEO services to get the positioning. You are basically amortizing your fixed expense of SEO over each visitor in a month. Here’s an example:
Fixed monthly SEO costs: $1,500
Monthly visitors from organic listings gained by SEO efforts: 25,000
The amount you spend acquiring each visitor: 6¢. Yes, SIX CENTS!
Now let’s say that 10% of your users complete a $25 sale. That means 250 people are spending $25 each for a total of $6,250 in sales. Take off your expense of SEO and you made $4,750!
Campaign Cost: $1,500
Capaing Sales: $6,250
ROI: 317%!
|
Organic results are listed below sponsered.
Click for a larger view
|
|
Now consider the fact that for each user that buys something, or creates a log-in on your site, you now have legit contact information for them! You can continue to remarket to your existing users and further reduce the cost it took to get that one user. Over time you can take the 6¢ and amortize it down to fractions of a penny!
Pay Per Click is good for the short-run.
Pay per click (PPC) ads typically appear at the top and right side of the search results as circled in the picture. Why do they get such primo positioning? Because they make the search engines money! PPC advertising can be a very expensive venture. I’ve had clients in the past who have spent over $100,000 a month! PPC is a good short-term solution because you can fix a budget and guarantee yourself traffic until your organic traffic starts to rise to the point where it matches or exceeds your PPC traffic, at which point you can turn down the extra expense of PPC. The main problem with PPC is that you are constantly bidding auction-style against all of your competitors. The bids continue to rise and there really isn’t a ceiling on it. I’ve had clients pay the unbelievable rate of $25 PER CLICK! That’s a hard campaign to sustain. I’ll break it down like I did above.
Fixed monthly PPC costs: $1,500
Fixed PPC management fee (if you use a firm to manage the campaign) $300
Average cost per click (CPC) $1.25
Average number of visitors to site through PPC campaign: 1,200
The amount you spend per user: $1.50
Let’s say that 10% of your users convert to a $25 sale. 120 people bring you $3,000. Take out your PPC expense and you’ve made $1,200.
Campaign Cost $1,800
Campaign Sales: $1,200
ROI: 80% - You are LOSING money in this example! |
PPC results are listed above organic results.
Click for a larger view
|
|
You can see that PPC is much harder to sustain over the long run and the cost ROI is a lot lower in this type of campaign. PPC campaigns are a good source of traffic to keep your site afloat while organic rankings are built, but if you are relying on them for your business, you can rely on a continued compression of your profit margins. With constantly increasing bids on clicks, it can take a whole lot longer to amortize a visitor’s expense than it does with good organic traffic.
|
