How to Estimate the Break-Even Point of Paid Search

PPC Management 

What is CPC?

A few months ago I wrote about the death of paid search and had to sustain the backlash of the paid search community through 38 comments and multiple “hate tweets.” I actually enjoyed the discussions and learned quite a lot from some of them.
The question that kept bugging me was if there’s a correlation between a price of a product or service and their CPC? Do keywords associated with high-priced products cost more?

Image Credit: Wikipedia

In the core of this question is the theory of economic equilibrium. Simply, in perfect market conditions, the price of products will be set at a level where supply and demand are equal and with no change in supply or demand, the price will stay the same.
The reason why this theory is important for understanding the relationship between product price and CPC is that if information was completely available to all parties in the market (a required assumption in this theory) then knowing the average cost-per-click (CPC) will allow companies to evaluate the effectiveness of paid search. In turn, companies will decide whether they want to invest in paid search, which will shift the demand curve, creating a new equilibrium price.
For example, if average CPC is low enough to allow positive ROI, more companies will participate in paid search campaigns, increasing the demand and consequently driving the average CPC up. When the price reaches a point of negative ROI, companies will stop their campaigns, decreasing demand and lowering the average CPC.
These shifts will occur until CPC will stabilize where both suppliers (Google) and buyers (advertisers) are satisfied with the return on paid search. That price point will be the point of break-even, where the investment in paid search (CPC) will match the return (sales at a certain price).
But why finding the equilibrium price of a channel is important or even interesting? Well, finding that price, and knowing the rest of the conversion rates of your funnel, will help you evaluate the potential effectiveness of a channel before you even spend a dollar on testing it.
Furthermore, knowing the equilibrium price can, theoretically, help you find arbitrages, places where the market is not at equilibrium and the price is lower than what it should (and will) be. Those arbitrages are opportunities to exploit imperfect market conditions to your benefit until supply and demand return to equilibrium and the price stabilizes again.

Researching the Equilibrium Price of Paid Search

In order to find the equilibrium price of paid search, I needed to find the break-even point.
To simplify, I assumed no overhead costs (no contractors, fixed costs, software costs, etc.) in my calculations, just pure CPC compared to revenue. I wanted to find out if it's possible to predict the effectiveness of paid search as a channel based on a company’s price point. The math is simple:

$X * W% * L% * V% ≥ $CPC

• Price of product or service = X
• Close won rate (%) = W
• Conversion rate from lead to opportunity (%) = L
• Conversion rate from visitor to lead (%) = V
• Cost Per Click = CPC

As long as the left side of the formula is equal or bigger than the right side, paid search is favorable. It seemed like I had a good start.
Using this formula, I can tell for any given price point what is the maximum CPC that I can afford before I start losing money on this channel. But putting together the formula is the easy part, finding the values for the variables needed to solve it, is the challenge.
So I embarked on a quick research to find the following variables:

• Close won rate (%) = W
• Conversion rate from lead to opportunity (%) = L
• Conversion rate from visitor to lead (%) = V
• Cost Per Click = CPC

One of the challenges with finding these variables is that they are extremely specific to industries. It’s hard to come up with a real average for these data points since the variation among the industries is so big.
Furthermore, when you look at individual companies, even within the same industry and market, you will find great variation that will prevent you from coming up with real averages (or at least statistically significant ones).
The solution is to look at optimal rates and not averages. Since my task was to find the price point in which paid search breaks even, I assumed that the entire funnel is optimized and the company achieved optimal results (within reason).
(Note: these figures relate to B2B organizations. With B2C, the funnel, conversion rates and overall marketing-sales process are different.)

Close Won Rate

This rate tends to vary the most because it’s based on the organization definition of an opportunity but it’s also extremely dependent on price.
I found several resources I could reference, but the one I liked the most came from CSO insights. In their annual industry benchmark report they asked companies “What percentage of your forecasted opportunities result in the following: No Decision, Loses, Wins.” The average for Wins was 38.8 percent. So I used 40 percent.

Leads to Opportunities

In SiriusDecision’s new Demand Waterfall model there are several stages for leads including Automation Qualified Leads (AQLs), Teleprospecting Leads (TQLs) and Sales Accepted Leads (SAL’s). For simplicity purposes and to make my model easier to calculate, I treat all leads as one bucket; a lead is anyone who submitted a form on a paid search landing page.
In most B2B funnels, this will be considered as an “Inquiry” or a “Known Name” therefore the conversion rate from that initial form submission to an opportunity, even if optimal, will still be relatively low.
I used Marketo’s benchmark numbers from their Marketing Automation ROI Calculator to calculate the optimal conversion rate from Lead to Opportunity and came up with 5 percent. To make paid search even more favorable, I used 10 percent.

Visits to Leads

The conversion rates of visits to leads vary greatly based on the source. Since we’re focusing on paid search, I was looking for data specific to paid search for B2B companies. I found three sources.

• Optify’s B2B Marketing Benchmark Report. This report had paid search at a median of 1.96 percent, but the 75th percentile showed a 3.58 percent conversion rate.
• AdWords Analysis (WordStreem Study) published by Jack Loehner. This study (no longer available on their website due to a change in Google's API terms and conditions), looked at conversion rates for the top 10 industries, showed an average of 5.63 percent across all industries with the best performing industry (Internet & Telecom) at 6.27 percent.
• MarketingSherpa’s 2012 Search Marketing Benchmark Report – PPC Edition. This report showed a median of 3.5 percent and an average (albeit huge variation) of 8.4 percent.

To make paid search favorable, I use the highest of the rates and rounded it up. I used 10 percent.

Results

I found that using these conversion rates, to break even CPC needs to be .4 percent of the price of the product.

CPC = $X * 0.004

WordStream’s study also showed the average CPC per industry for the top 10 industries. I used those averages and the formula above to provide the price point for each industry at which paid search breaks even.

Use these break-even prices to determine if paid search is right for you. Remember though, that these break-even prices were calculated based on optimal B2B conversion rates. If your conversion rates are different (and they probably are), use them to evaluate paid search before jumping into it.

What About the Equilibrium Price?

Since the market conditions are far from being perfect, and at the heart of the imperfect market condition is the unavailability of information, it’s almost impossible to come up with the equilibrium price of paid search. CPC rates continue to fluctuate so keep an eye on your own break-even point and make sure you make the most out of each campaign.
resource:http://searchenginewatch.com/article/2255282/How-to-Estimate-the-Break-Even-Point-of-Paid-Search

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Four Essential SEO Factors to Optimize Your Website for Search Engines

Search engine optimization (SEO) is a vital part of website design and marketing. A properly optimized website will allow web crawlers to properly index your website for search engines (such as Google, Yahoo!, Ask, and Bing) so that your site appears prominently in the search engine results pages, or SERPs. Four of the primary areas of consideration for SEO are:
1. The Appearance and Usability of Your Website for Visitors
Search engines can track how many visitors your site has, how long they stay on your site before clicking elsewhere, and how often they return. All of these play a role in how well your website performs in search results.
Considering this, it is essential that your site be optimized not only for search engine web crawlers but also for human visitors. If your visitors find that your site is easy to navigate, contains useful content, and can provide value on an ongoing basis, that will be reflected positively in the SERPs.
This also means that you must keep your site active. If a search engine discovers that your website is neglected for long periods of time and grows stale – especially in comparison to other sites offering similar content – visitors will stop returning and your site will sink in the SERPs. Regularly updating your site with new content, on the other hand, can enable your site to ascend the rankings.
2. The Quality of the Content Contained on Your Website
More and more, search engines are attempting to direct searchers to websites that contain quality content. Providing good content optimized with the keywords and phrases that searchers might use can boost your site’s performance in the SERPs and draw more visitors. If your site is filled with advertising or riddled with spelling or grammatical errors, however, it will negatively impact your site’s performance.
The uniqueness of your content is also an important factor. This is true now more than ever, and continues to grow in importance with every update to search engine search results ranking algorithms. If your site is found to contain duplicate, near-duplicate, or spun content when compared to other websites, it will lessen your site’s value, at least in the judgment of the dominant search engines. Whether you create your own original content or hire others to do it for you, it is a SEO necessity that your site be unique.
Additionally, considering the problem of content scrapers (which will steal your content to use it on other sites), it is recommended that you regularly post new content. You should also take precautions to limit those who might steal your content. For example, you can limit the amount of content contained in your RSS feed. You can also file a DMCA complaint whenever you discover a content thief.
3. The Traffic Your Website Attracts and Maintains
A well optimized website will entice visitors to revisit your site periodically. This can be a signal to search engines that your site has been deemed useful by its users. If these users add links to your site from their own websites, that will also add weight to your site’s importance.
You can increase your website’s traffic and the number of links to it in a variety of ways:
• First, you can include your URL in any comments you make on blogs. If the blog applies a “no follow” tag to its comments, however, it will not be counted as a link to your site.
• Second, you can submit articles as an “expert” to be posted on another reputable website. Typically, sites will permit you to include a short bio containing a link to your site.
• Third, you can submit your URL for inclusion in relevant online directories.
Beware, however, of unethical link exchanges or purchases, as these will harm your ranking, possibly even resulting in a ban from selected search engines.
4. The Technical Elements of Your Website
In contrast to the early days of SEO, search engines today want to see sites that are designed more for the user than for web crawlers. Thus, the usability and quality of your site are of primary importance. There are, however, some SEO elements that remain a bit more technical. While these elements do contain value for visitors, they are generally intended more for the benefit of web crawlers. These elements include:
• An XML Sitemap and robots.txt file. These can each assist web crawlers as they index your site.
• Page titles containing keywords. These are the titles that are inserted into the HTML code and appear in the bar or tab at the top of your Internet browser.
• Effective text formatting that incorporates heading tags. The formatting you use, which can also enhance your user’s experience, can emphasize your keywords to search engines.
• Alternate descriptions for images and videos. Though many users will never even notice your alternate descriptions contained within your HTML code, they can reap rewards in terms of SEO.
• URLs containing recognizable and relevant words for searchers. Using real words rather than codes or non-descriptive terms will make your URLs more memorable and can also be another way to incorporate keywords.
• A custom 404 “page not found” error page. This will show that you are concerned about your visitors experience with your website. The 404 page should be consistent with the rest of your site and can provide a link to your root page, an HTML Sitemap, and other important sections of your site.
Invest the time and effort to apply SEO to your website. It can make the difference between your site’s success and failure. Though there are no guarantees, an optimized site has the potential to climb the SERPs and achieve a prominent position at or near the top. This greater visibility typically translates into a greater number of visitors, which in turn enables you to market your product, promote your message, and share your opinions more effectively.
resource:http://www.seo-news.com/four-essential-seo-factors-to-optimize-your-website-for-search-engines/

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Using Web Analytics to Save Money in Business!

Web Analytics tools are a very powerful tool if you would realize their potential. And these days, there is no dearth of such tools. With new and revamped versions and use of the latest mapping technologies, the kind of charts and information these tools provide can be used greatly to your advantage.

Any good analytics tool offers a lot of information on demographics, keyword related searches, landing pages and more importantly exit pages. All of these cues can be used to your advantage. For example, an analysis of exit pages can be used to design new buttons which prompt a user to action and lands him on a, say, checkout page or on a page with a lot of options to club products and earn discounts or to a free video tutorial to learn about a product or even a testimonial page! Similarly, demographics can be used to concentrate ad campaigns to specific regions (too obvious). Traffic Sources can be analyzed to better understand how users are finding your site and then maybe using sponsored ads at some of these sources. Then again, the Mobile Visitor trending can help you realize whether or not you should spend money to build a special mobile version for your kind of website. Or you could simply go to your Analytics dashboard, see the overall Pageviews for the month, the bounce rate and Time Spent and then logout, like I promptly do. But then, even this can provide you with valuable information!

Now, I suck badly at analyzing charts and honestly I am too lazy to look at a chart and draw conclusions. But very recently, a simple observation saved me a lot of money. In fact, it helped me made some! I never cared to see this previously, but the charts I get to see from my analytics report for my business website can display daywise as well as hourwise. This (eureka) discovery actually brought a pattern right in front of my eyes. There was a specific time of the day (on 3 particular days of the week) I was getting the maximum pageviews. It was not always true, but there was definitely a pattern.

Now my ad campaign does not run daily (still short on budget). So, I decided to concentrate the ads around this time of the day. Obviously, the campaign gets exhausted soon because the searches are maximum (as the report suggested) at this time. But, the chances of conversion are greatly increased. This did bring me an increase too, although I am too lazy to analyze if it was an increase of 10% in the conversions or 43%. Maybe, some other time.

So my advice is that if you are running an online business, the first thing you need to do today is add some analytical intelligence to the website's pages so that you get your hands on some real Visitor Trending information. Once you have that, keep aside a day every week to analyze how your website traffic is behaving. Take my word, the discoveries you will make will be worth every minute of your precious time.

Article Source: http://EzineArticles.com/6831082

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How to Use Blogs for Search Engine Optimization and Backlink Building

It's no secret that blogging can boost your search engine rankings and drive traffic to your website. Blogs promote the exchange of ideas in a format that the Internet users have fully endorsed. When search engine spiders find an active blog, they tend to crawl it more frequently and more often. Incorporating a blog into your website will help you get quality backlinks and improve your credibility.
Many business owners are not aware of what the search engine optimization benefits of blogging are. A recent study conducted on a group of SEO practitioners has shown that over 87 percent of those who have used blogging for SEO have obtained measurable results. Backlinks were cited as the most important SEO benefit from blogging. Starting a blog can also help you establish authority in the marketplace, interact with your customers, and promote your products more effectively.
Most blogging platforms offer uncomplicated URL structure, making it easy for search engines to find and crawl your content. An active blog creates the kinds of signals from other websites that search engine spiders tend to reward in the rankings. A blog that is updated frequently attracts both human visitors and search engines.
The better you write, the more people will link back to your site. In addition, there are many plugins and widgets that make it easy to share your articles and posts, thus encouraging links. You can also use blogging to constantly add fresh, relevant articles to your website. No one can give an exact answer on how often you should blog. Most experts say that whether you update your blog once a day or once a week, it really doesn't matter, just as long as it is relevant and consistent.
Not many webmasters and business owners who start blogs have the patience to create quality content. If you want people to find your blog and click back to your pages, you need to write compelling posts and use relevant keywords. No matter how many SEO techniques you use, there simply is no substitute for creating quality content.
Conduct backlink analysis on competing blogs and take the time to look at articles that already rank well in search results. While the main objective of a blog should be to get your message out, don't forget to do proper research and optimize your content for search engines. Get listed on other people's blogrolls and include your blog URL in profiles on social media sites.

Article Source: http://EzineArticles.com/7005198

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Focus On Quality In Your Backlinking Strategy

Online marketers don't need thousands of backlinks to achieve higher rankings in the search engines; what a marketer needs is a backlinking strategy that values quality over quantity. Of course, the more links you get, the better, but they should be quality links.

Backlinks are very important to your search engine rankings and every Internet Marketer should include an ongoing program of building links back to their websites. Some website owners try to take short cuts by purchasing backlinks or signing up for services that promise a multitude of links in a short period of time, but these tactics are not always effective for the purpose. Quality is always better than quantity.

Whatever your method is for getting backlinks, you need to make sure it is serving your purpose and helping you, not hurting you, in the search engine rankings...

If your backlinking strategy is going to be effective, you must get your links on sites that are similar to yours. In other words, websites that sell products and services very much like what you sell.

One hint is to look for websites with your keyword phrase in the domain name or in the page title.

When selecting appropriate sites, always aim for quality. One indicator to look for is Google PageRank; the higher, the better, and if it is higher than yours, even better yet. However, take note that PageRank is not always accurate. When in doubt, consider the quality and value of the site being looked at.

Whenever you can swing it, backlinks from authority sites - sites recognized and respected as leaders in the industry - are always the best. Linking goes both ways and that is another reason to choose sites similar to yours; so you have a better chance of having your link request accepted.

The links you get placed on other sites should be set up with anchor text using your keywords. For example, if your keyword phrase is "home business opportunities" then that should be the anchor text for your link.

It makes sense, then, that the page on your site that you are linking to should be optimized for the keyword phrase being used in the backlink. That is the main reason for getting a backlink, if your purpose is to improve your search engine rankings.

The techniques used to get backlinks, and the places on the Internet where backlinks are possible, are various. Article Marketing is a common method, as is guest blogging. Direct link exchanges are possible, but it is recommended to build the link into the content of the website, using your keywords as anchor text. Some Internet Marketers develop a backlink-building program around blog commenting. Again, choose quality blogs similar to your own website and check to see if they are "do-follow" blogs.

Using a good backlinking strategy that focuses on quality over quantity is very important to an online business. It takes time and dedicated effort, but that is the mark of a professional. If you are not already recognized as an authority in your niche, you now have one more piece to the puzzle.

Article Source: http://EzineArticles.com/6973784

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How a Social Media Agency Boosts Revenue

Are you looking for a social media agency that can help your business flourish? More and more businesses are looking for such agencies to effectively promote their products and services. They make use of popular social networking sites such as Twitter, Facebook, Multiply, LinkedIn and YouTube. They use these networks to help businesses promote their products and services. If the client's product becomes a hit, they have achieved their marketing goals.

What can I gain from a social media agency?

-Earning your customer's trust

A good agency can provide you with a platform where you can communicate directly to your customers. You will be motivated to start important conversations and answer their questions. This is one way of showing your clients they are important to you.

You can show the human side of your business and win the trust of your target audience. This naturally leads to strong customer retention and loyalty.

-Get regular sources of feedback

You can start generating a regular source of honest feedback if you hire an agency to run your marketing campaign.

If someone checks your business using Facebook, you may directly ask about their experience. You can find people talking about your company on Twitter and reply to their comments. This will show them how much you care about their opinions. Plus, you can get direct feedback helping you improve your services.

-Generate leads!

Hiring an agency to manage a marketing campaign is the best opportunity to get highly qualified leads for your website.

Go ahead and join relevant conversation, reach out to people and be involved in Facebook discussions. Make sure to distribute useful and informative content. Playing a pro-active role may encourage members of your community to visit your website and have a better chance of converting them into buying customers.

Other options to consider

Try looking up SEO companies if you want to increase your website's online visibility. They don't just provide social media marketing; they use many other techniques so your website may reach more customers.

Here are some techniques SEO companies use to increase traffic on your website:

-On-page optimization

This service is the first and most important activity in search engine optimization. It involves populating your website with relevant search keywords. These keywords may appear on the content, titles, and your site's meta tags.

-URL Mapping

This service involves creating URLs or website address and links that can be easily remembered by online users. SEO companies map them into portal pages to make the URLs user and SEO-friendly.

-Content writing services

Good SEO companies hire skilled web writers who can make relevant content. This is one of the important elements needed to be on top of search results.

-Online Reputation Management services.

Search engine optimization firms may also act as your online public relations arm. Remember that good communication between the company and clients is important. Businesses must always be sensitive about what other people say about them. It does not matter where the comments come from, they will always have direct or indirect effects in marketing a product or service.

Article Source: http://EzineArticles.com/6926870

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Search Engine Ranking - Quick and Easy Tips To Get To The Top!

Search engine optimization (SEO) is one of the most important things to learn if you're looking to get to Page One on Google.

There are several different techniques you can use, but they all have one thing in common, and that's to get your website ranking highly in the search engines. By having a high ranking site, you will attract more traffic to your website, gain more exposure for your business, whether that's online or bricks and mortar, and most importantly you will increase your bottom line profits.

Build It And They Won't Come!

Just having a website does not mean that visitors will find it. Even if you think you have the best looking website in the world, it doesn't mean a flood of traffic will suddenly hit your site unless you do the right things to promote it.

The first promotion you need to do is alert the search engines to your website's very existence. There are literally 1000s of new websites coming online each and every day, so unless you wave the right flags to say "here I am, come crawl me", the search engine spiders will bypass your website for the ones that are being actively promoted.

On Site Optimization

The first thing you have to do in order to improve search engine ranking is start out with the right basics. It's no use employing the more technical ways of getting higher in the rankings if you don't have a good foundation to build on.

A solid foundation for your website's future rankings can be created by having good on page optimization. By this I mean, your actual website must be built in a certain way, and the content must contain certain elements, for the search engines to love it.

Proper Use of Meta Tags

Good onsite optimization does wonders for your website. You are in control of your site, and there are things you can do to make your website stand out and shine like a beacon in the mist. Arguably the most important onsite optimization technique is to use good Title Tags. Title tags will definitely improve search engine ranking because it will describe to the search engines what your web page is about in a nutshell. Therefore the main keyword you wish to be ranked for should be included in the Title Tag as part of a short description.

The next most important thing is the Meta Description. Again, ensure your main keyword and some related keywords are included, but definitely make sure it reads well since this description is what will be shown to searchers and will influence whether or not they click on your link. Try to make it a call to action, and keep it to a couple of sentences at most.

Meta Keywords used to be taken into consideration by the search engines, but since this feature was often abused by webmasters and used for keyword stuffing, the Meta Keywords are now largely disregarded by the search robots. That's not to say you shouldn't make use of this section of your website and include relevant keywords, but it will not be a big influence on how your website ranks in the search engines.

Summary

On Page or On Site Optimization is a key tool to improve search engine ranking, and if you implement the things we've discussed above, you have a solid foundation to build upon and further improve your results.

Your website should be seen as a long term investment which you have to look after and nurture, and over time with the right techniques you will see significant improvements in your rankings, and in turn significant improvements in your website's performance in relation to sales.Article Source: http://EzineArticles.com/6876023

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Changes in SEO Strategies After Google Panda Update

Google is one of the most innovative and powerful technology companies in the world. Google is synonymous with online search as it controls more 80 percent of internet search market. Online entrepreneurs around the world are aware of Google Panda, the software that Google uses to index and list different web-pages in its search results. Recently when there was an update to Google Panda, many websites around the world had to suffer and some even ended up losing 80 to 90 percent of their traffic.

People who used unfair and illegal SEO strategies, like using junk or duplicate content, SPAM content etc. had to suffer due to this new update to Panda. Illegal SEO strategies will no longer yield any results as Google will only index pages based on the popularity and originality of the content of the website. On the other hand, this update will help internet users around the world as they will be redirected to genuine sites where they can get the answers to their queries.

In order to survive this Google Panda update, people have to make changes to their SEO strategies and stop all illegal or unfair means of traffic generation or SEO. Here are a few ways through which people can make sure that their websites are not banned by Google Panda:

1) Give importance to quality over quantity - Do not just fill your website with junk content that will not be beneficial to the visitors. Instead, opt for high quality content which will be informational and will not be off topic. The readers should be attracted to your website because of the quality of the content, so that they will visit the site, again and again. Google also gives an option of rating the website and the websites with higher rating will get a higher rank in Google search results. Out of the all the SEO strategies, creating quality content is the most important one.

2) Avoid duplicate content - Google Panda will penalize and ban all websites that have duplicate and copied content and so, it is advisable that you do not include any duplicate content in your website. If you want to include anyone else's work, you must take their prior permission. Avoid plagiarism at all cost and always provide the sources for all the articles that do not belong to you.

3) Efficiently use keywords - the keyword density should be within 1 to 2 percent. Websites with extremely high keyword density will not be indexed by Google Panda.

Following the above mentioned SEO strategies will be helpful in maintaining the position of your website, after the recent Google Panda update. Article Source: http://EzineArticles.com/6817741

Search Engine Optimization : Top search engine ranking for your company or agency by organic search engine optimization specialist, SEO consulting service by expert consultant.

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