How To Measure Search Engine Marketing ROI

According to the Search Engine Marketing Professional Organization (SEMPO), advertisers spent $4 billion in 2004 on search marketing programs and are expected to spend 39% more than that this year.

Search engine marketing appears to be a great way to advertise but is it right for you and your business? If you are not already employing search engine marketing(SEM) for you business is there a way to forecast the return should you decide to invest in it? Is there a way to measure the results you are getting if you have already invested in SEM?

The answer is mostly yes. By utilizing data discovered in recently released research surveys and with the help of a few free online tools you can put begin to take some of the guesswork out of search engine marketing ROI. By using Overture's free keyword suggestion tool (inventory.overture.com) you can get an idea of how many times a keyword is getting searched each month. Another free tool to use is called Good Keywords and can be downloaded from www.goodkeywords.com.

Let's say for instance that you are a mortgage broker in the Denver Colorado area and you are interested in getting more leads for your business. You have a website and are considering search engine marketing to bring in some new leads. You get a quote from a search engine marketing provider who can guarantee top 10 positions among the major search engines for 6 months for your keywords for $1,500.00.

The question now becomes is it worth it to you to spend the $1,500.00. To figure this out we need to look at some numbers.

Berrier & Associates estimate that 65% of all traffic generated by a search in a search engine will go to the sites listed within the first 10 results (first page) returned for that search. By using Overture's keyword suggestion tool you discover that the term "Denver mortgage broker" gets approximately 540 searches a month.

Using this criteria a first page position for "Denver mortgage broker" would bring you approximately 65% of 540 searches a month = 350 visitors to your site each month. Having a compelling title tag in your website's pages might even boost this visitor number since the title tag is what appears as the clickable link in the search results.

The formula we just used would then be applied to all the other keywords you are targeting such as "mortgage Denver" which gets approximately 2,600 searches a month or "mortgage company Denver" with 466 searches a month. A first page placement for any of those would yield similar results.

So let's say we just use the "Denver mortgage broker" key phrase as our example with its estimated 350 visitors a month for a first page position. You would now need to know what your website conversion rate is. The website conversion rate is the ratio of leads or sales you get per visitor amount. The average website conversion rate is about 1-2% or 1-2 leads or sales for every 100 visitors according to Shop.org.

If your website conversion rate is average then you would expect on average 2-3 good leads from your site each month for that one first page listing. Then depending on your sales conversion rate which is the number of sales per leads you get on average multiplied by your average sale price you can begin to calculate what your return might be.

So let's say as a mortgage broker you make roughly $2k on each deal you broker and your sales conversion rate is 1 sale for every 3 quality leads. In any given month then you could estimate 1 sale at $2k out of the 3 quality leads generated from your website which came as a result of the 350 visitors you got from being on the first page of Google, Yahoo or MSN for the term "Denver mortgage broker".

You paid the search engine marketing company $1,500.00 dollars for 6 months of first page listings. From one of those first page listings you stand to gain $2k x 6 months = $12,000.00. That sounds like a really good return for money invested.

In closing the methodology outlined in this article to calculate search engine marketing ROI is by no means 100% accurate due to several factors but it is a good way to get a "feel" for what you might get back for your marketing dollars. Its also a way to get business owners to start thinking about how to better track their e-business. I have just finsished building a quick and easy seo tool that will enable you to do these calculations automatically available for free at this link SEO Tool

Copyright 2005 Charles Preston. All rights reserved.

Charles Preston is an Austin based SEO with 7 years of industry experience. Charles is the President of Click Response an internet marketing company focused on teaching small businesses how to get the most out of their internet marketing. For a free consultation or more information please visit http://www.clickresponse.net

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