Investment per conversion
From ranking on a search term to a closed deal, a conversion undergoes several stages. These stages are all as important as the investment for achieving a ranking. They are the real money making factors in search engine marketing.

$ ≈ # ≈ ☺ ≈ $

Investment per conversion can be seen as the formula above. It states that:

1. $ ≈ # The investment for ranking:
   What is needed to rank for a particular search term? This factor is mainly determined by the competition (both SEO and SEA).
2. # ≈ ☺ The chance of being clicked:
   Is my result relevant enough for that visitor? Getting many clicks on lower rankings can easily beat 1st positions.
3. ☺ ≈ $ The chance of a converting visitor:
   Do I offer the right service for the visitors desires and is there an easy navigation? Even small improvements in usability can double your conversions.
4. $ …≈… $ The investment and profit per conversion:
   What is a conversion worth and do the costs match? Having a bigger margin creates bigger budgets to outrank the competition.

The ≈ is used to state that there is uncertainty. It equals the chance of something resulting in a desired action. Your SEM knowledge can make that chance far easier to determine in advance.

Calculation example
To clarify how important conversion is I will give two Google Adwords examples taken from real websites. These are Dutch examples in the credit business. I’ve converted the costs-per-click using the current dollar to euro ratio, and simplified some figures for easier calculation. The biggest difference between Website A and B is that B uses its homepage as landing page and A creates specific landing pages for every single search term.

What can we conclude?

• Website A is willing to pay more per visitor, but they measure better if they convert. They know their real maximum.
• The percentage of people starting the order form is enormous, but the obvious button on a very relevant landing page (doorlopend krediet landing page) gives Website A an even better CTR from the landing page than Website B has from the homepage (their landing page) (70% vs 50%).
• The order form in Website B has 5 steps across 5 pages and they require you to fill in everything. Website B uses 3 steps on 1 page (loan request form) and requests any missing information using a call-center. This is more expensive, but converts at least just as good. Therefore a lower profit per lead.

This is a real example and I know these percentages seem extreme, but I assure you these differences are common in many industries.

Website A can do much better!

Website A seems to have everything well in order, but they can use search engine marketing even smarter. The credit industry is extremely competitive, but other less competitive industries might offer chances for loans. Do you see the relevance between a divorce and loan? Well, visitors sure do.

Website A created a section specifically about financial problems that arise with a divorce. You suddenly need a lawyer, an extra home, extra furniture and you might need to pay alimony. All costs that come very inconvenient during a period that is tough enough by itself. A loan might offer some comfort to get things in order.

After introducing this new section, Website A did multi-variate-testing on Ads and landing pages. Below we compare the original situation to the situation that was achieved after testing.

Compared to “doorlopend krediet” from the first example, “scheiding aanvragen” creates a far larger profit. The amount of searches for “scheiding aanvragen” is lower than “doorlopend krediet” and therefore both are needed to fill the demand for loan leads. But every less competitive industry we can associate with loans can be added to our audience. Combined these have a great potential and the profit is enormous “until other banks discover them”. So I’m not going into the details, but you should get my point. When you keep your Profit per conversion high and cost per conversion low, you can outbid any other company (especially from other industries).

Choosing a less competitive market and search terms with high traffic volumes can get you much cheaper traffic. But does that convert into sales? Here are a few examples how to get cheaper traffic for a better ROI.

1. Branding and creating awareness with search
2. Exposure is cheaper than clicks
3. Ensuring ROI with cheaper traffic
4. Profitting from high traffic search terms

Branding and creating awareness with search
Search engine marketing is normally “pull marketing”: Someone requests something and you offer it. But it can also be used as “push marketing”: Someone didn’t know he was looking for something until he came across your offer. Push marketing will probably convert less well into sales (or any other goal on your website), but for exposure/awareness purposes it can work even better than staying within your defined niche.

When there isn’t much awareness for the solutions you offer or when your audience doesn’t even know the problem it solves is relevant to them, you might need to try other (online) marketing solutions than search engines. Normally you could rent a bannerspace on somewhat relevant resources that target the same audience, but you can also get cheap exposure from search engines.

Exposure is cheaper than clicks
For instance in Google Adwords, Yahoo! Search Marketing or MSN Adcenter; When you bid on a less relevant search term and you use a very specific proposition of the thing you offer, you won’t get the highest clickthrough-rate. But the traffic you recieve is relevant as long as you are honest in the adtext. You might pay more per click than other advertisers because of that lower CTR, but you don’t pay for the exposure, just for the clicks.

Example:
You offer logistic software for the transport business, then people might not search for your product often and they might even be unaware that they would need such a service. In that case try bidding on terms like “buying a truck” and then use an ad like “Buying a new truck? You might want to track what your drivers are doing. www.TruckTracker.com”. If that isn’t what someone was looking for, they might just haved spotted it and it made them think. So make sure you brand your message. Of course this is just one example, but it shows that search can be used as push marketing.

Ensuring ROI with cheaper traffic
Both paid and unpaid search listings suffer an ever increasing competition. This competition competes for just 21 spots (in Google 10 unpaid, 3 top ads and 8 paid results on the right) on the first page and the second page is rarely visited. Nowadays even the most specific long tails are targeted by all bigger players. The websites with the most revenue on that search term can outrank anyone in both the paid and unpaid (yes that too depends on effort and money) results and there is no place left for a highly relevant, smaller retailer. So how does the smaller retailer get his traffic? Or how do you maintain a high ROI without having to outbid everyone?

The trick in ROI is that effort equals money and wit can reduce the required effort. You have to be a good online salesman and you need to focus highly on usability, but turning less relevant volumes of traffic into conversions can reduce the cost per conversion enormously. This is best explained with an example. Let’s state the following:

You sell mortgages and loans nationwide and as you might guess; The competition is enormous and even though the revenues are high, traffic is expensive and thus your ROI is minimal. Long tails are targeted by all your competitors as well, so no cheap traffic there.
But what are the loans or mortgages used for? If you are used to the competition in the loan business, the competition in other businesses is peanuts and traffic is much cheaper. With loans, try focussing on terms related to buying a boat, refurbishing your house, buying a car, expensive holidays, new kitchens, buying a computer and many more, but make the traffic relevant.

Search term:
“buying boat”

Ad text:
“Buying a boat? Finance ready?”
Compare every loan provider
for tailored boat loans
www.loanCompare.com

Landing page:
And create a landing page tailored for boat financing with possibilities to get more information, but a clear button to request an estimate for their situation.

Where it says ad text, you can also say description in organic results, because even organic results can be steered in great detail. You can use this example for every slightly related topic. And making it relevant is easier than you might think. Cheap traffic is, irrelevant traffic turned into conversions.

Profitting from high traffic search terms
As you might have read in the previous topics: In paid search you don’t pay for exposure, just for clicks; Irrelevant traffic might be less competitive; And any traffic can lead to conversions when you make it relevant. These points are as true for normal searches as for very popular searches.

Take for instance news topics, popular people, government information or seemingly unexploitable topics. News (like war Afghanistan) gets high volumes of searches, but not many advertisers compete on related terms. Most popular people (like Clint Eastwood) get only a few ads for their name. Government information and social dilemmas (like unemployment) get little attention, although they are easily exploitable for commercial purposes.

• See your ad as free exposure and less as a cost per click based revenue maker.
• Brand the message and sometimes even prevent clicks.
• And make pages specifically for converting irrelevant traffic into sales.

Conclusion
Any traffic can be good traffic as long as you are clear about what your services are from the beginning. Prevent people from visiting your website or even contacting you with the wrong intentions. The costs of clicks, bandwith and your time can become your downfall if you don’t. These rules are as true for paid ads as for organic listings so read them as such.

I wish you much success in your business and try to give me feedback once you’ve tried it.

What is the long tail?
If you order search queries by the amount of searches they recieve, you would get a curve like the one below.

As you can see, the curve drops quickly after a few very popular seach terms and after a steep drop it levels out. This indicates that there are a few thousand top search terms that recieve millions of searches each month. It also shows that the curve doesn’t drop to zero. If you would continue the curve further to the right you will find that it doesn’t reach zero at all. There are millions and millions of search queries that recieve at least one request and most of them recieve multiple requests each month. The millions of search terms below the drop in the search curve are called “The Long Tail”.

What does this mean?
The problem with popular search terms is that they are just that; popular. They are not only popular with searchers, but also with search engine marketeers. This way the competition gets fiercer because there is a limited amount of top positions with high exposure in the search engines.

This causes higher costs per click for the sponsored results and more tricks and spam tactics for the organic results. Both increase the cost of reaching the top spots and decrease the return on your investment (ROI). This is why search engine marketeers are now aiming for the long tail.

Further down the search funnel
The long tail consists mostly of more specific search terms than queries from the top of the curve. This means the searchers need to know more about what they are really trying to find, are further down the decision making process (AIDA) and are closer to the action.

Long tail search terms will most likely convert better to sales because they are further down the funnel. But you will need much more search terms to get the same amount of visitors than from terms higher up in the funnel.

Ad matching
The long tail is not only defined by what query the searcher uses. Targeting specific characteristics of the searcher gets you further down the curve and decreases competition. Ad systems like Google Adwords allow you to target specific languages, locations, times and much more. Keyword matching options allow you to further specify when your ad needs to show and when not to. But does that mean costs per click wil drop if you match better?

Better targeting of your audience gives you a better conversion and ROI. But many websites target as broad as possible because they don’t have this insight. This causes costs per click to rise for all searches included in that match.
If a search engine bids five dollars on the broad match “search” he automatically bids the same amount on the search query “house search in templeton virginia”, which is not exactly relevant to their services. But it might be to your realty website. To beat the search engine on this query you will need to bid at least the same amount.
Because of bad matching by irrelated websites, the long tail isn’t as cheap as it could be. Long tail ads are cheaper, but not cheap enough to focus on them entirely. How is this with organic search?

Organic long tail
The long tail in organic results is mainly targeted unintentionally. Especially when the search query contains more than three words it is unlikely that someone has intentionally focussed on it in the text of their website. This makes the organic long tail still something that can be targeted with little effort. The only hard part of organic long tailing is incorporating every search term variaty (singular, plural, verb, noun, adjective, superlative, etc.) and every combination in the text on your website. When you include all these variaties of the same text onto separate pages, these pages need to have a viable reason (for your visitors) to exist.

The other hard part of organic long tailing is link point distribution. You need to get every page indexed and search terms with more competition need more linkpoints then others. The internal link structure needs to distribute linkpoints, but also needs to group related topics in the right way. Targeting the organic long tail is something you can do with every website, but targeting large amounts of long tail search terms is something that needs some SEO expertise.

Long tail misconception
The long tail is not by definition cheap or easy to achieve. It isn’t always converting better than other search terms. Depending on the competition in your branche most long tail targeting is accidental, but that doesn’t always make it easier to achieve better rankings.

It is possible to target every search term you can think of. Even if every used term is only queried once a year, they are still worth integrating in your texts or ads. The shear numbers have a much bigger potential than any top search term you can think of. Just make sure you offer services that are related to the possible queries.

Top search terms (so called Hits) aren’t always a good investment. Not because they don’t get visitors or don’t convert to sales, but because most of them have a short life span. If you’re one of the first to enter a hyped search category, it can be relatively cheap to target it for a while. But once the hype has started it might be a bad investment for the long run. Choose your search terms (both hits and long tails) based on competition (effort), visitor count and popularity lifetime.

1. Your first ever search engine will be either the default one on your computer or the one someone advices you to use. If you remain satisfied with the results you’re not likely to switch. This is why all search engines want to become the default on new computers.
2. Unexperienced searchers are more likely to type full sentences in stead of only keywords. As people become more acquainted with search they will use only key-words and even start using phrase and negative query options.
3. Unexperienced searchers won’t know the difference between sponsored and organic search results and are more likely to click ads. As experience grows they will sometimes create an automatic ad filter and they won’t even notice the ads anymore.
4. Websites that sell something are more likely to use sponsored listings. And because people aren’t always searching to buy something the sponsored listings are deemed less relevant in most cases. Only when someone is looking to buy, they are more likely to look at and click on ads.
5. The decision phase someone is in determines what keywords they use and what they click. The Search Funnel (pdf) can be used to determine what keywords belong in which phase and shows you which steps need to be taken to end up with a buying customer. Down the AIDA funnel (Attention, Interest, Desire and Action). In which Action can be buying something.

   
   (Click for PDF)

   To get a buying customer someone needs to go through the entire decision making process. If you get your website visitor in the “attention” phase you need to offer him all the following steps and information without loosing him to a search engine which might be able to give him more information then your site does. The further down the search funnel you get your visitor, the more likely someone is willing to buy or take any other desired action. Maybe this article can help: Best landing page layout.

   Target keywords from all phases, but make sure you offer the desired information for that phase. Guide them to the desired action on your site, but in these steps offer answers to possible questions in every decision phase.

6. Most websites are written in only one writing style. They can for instance use commercial language, corporate language or informal language. They’re also written from a specific knowledge level with the presumption that the visitor has that same knowledge. Write your text from all different standpoints, all knowledge levels and every possible writing style that is suitable for your product or service. Just figure out a way to do it all in one website and target all possible search queries.
7. Organic and Sponsored search results are almost always placed in the format Title, Description and URL. Eye-tracking studies on the Google result pages show that it is not only important to be amongst the first five search results, but it is even more important to be have a relevant and attractive result. The second result can easily convert better then the first as long as it is more relevant to what the searcher was looking for or even more then he was looking for.

   
   (Click for full page)

   The different colors show how much time was focussed on a specific region of the page.
   The X-es show where the user clicked.
   The red lines show how far someone scrolled.

   As you can see people don’t scroll much, but that depends on the first five results. If they are exactly what the searcher was looking for, they will click those. If it was nothing like what they were looking for, they will click the search box to refine the search. If it was somewhat what they were looking for, they will scroll to see if there is something better in those results.

   People scan the results for what they were looking for. Having the keyword in your title and description makes them bold. Something bold ate the beginning or end of the line attracts extra attention.

   Make sure your result stands out of the crowd. Titles in search engines are your page titles, the descriptions (snippets) are either: 1. Your DMOZ or Yahoo directory description. 2. Your description metatag. 3. A specific piece of text from your page where the search phrase is situated. Test titles and descriptoins in payed search and reflect the successfull ones in your webpages.

8. The future of search is in personal search, custom result page layouts and vertical search. All of these result types make it harder to predict where and how your result will be shown. Make sure you end up in every relevant vertical search type. In a future post I will focus on influencing personal and vertical searches. It isn’t very important yet, but just realize that this is coming!

These are just a few of my findings. The article would become too long if I continued. Maybe I’ll focus more future posts on this subject.

Google Adwords quality scores
First let me tell you there are two distinct quality scores in use with Adwords. One influences your minimum bidprice and one influences your actual cost per click and ranking.

Minimum bid price
The minimum bid price is the cost per click you have to pay to have your ad appear. Even if there are no competitors, your keyword will be placed on hold if you bid less.

Minimum bid prices are mainly based on:

• The historic relevance of your (entire) site to a certain topic.
• The relevance of the used landing page to the used keyword.
• And the popularity of the keyword.

As you can see you can’t just bid on any keyword with any website and any page. You can, but you pay much more. Bidding on a new unrelated hype just to get large amounts of traffic is therefore much harder to do.

The relevance of both website and landing page isn’t only based on the text, but also on relevant links to them. A page that scores or could score organicly is therefore the best landing page and SEA (search engine advertising) needs good SEO (search engine optimization) now, more then ever.

Ranking quality score
A high ranking quality score gives you a higher ranking or lower actual cost-per-click than a competitor that has a lower quality score.

The ranking quality score is more based on coherence between keyword, ad text and landing page, than actual organic ranking. Both ad text and landing page need to include the keyword and related words. Ad text and landing page need to have simular content so the algorithm can detect if the promise you make in the ad is kept on the landing page and is not some trick to boost the click through rate.

Ranking quality score is mainly based on:

• Historic click-through-rate on the used keyword matching option.
• Historic click-through-rate on the used ad (title, description and landing page).
• Historic click-through-rate on your account, campaign and ad-group.
• Used matching options.
• Bounce rate (direct returns to Google after clicking the ad).
• Ad relevance to keyword.
• Landing page relevance to keyword.
• Coherence between ad and landing page.
• Not as important, but will be in the near future: Organic ranking of the landing page.

It is not as much that you need a good SEO to influence these factors, but you need a good copywriter with expertise in search. Your copywriter should know how to take all these factors in to account.

How to!
Here is one way to start a good ad campaign and paying as little as possible:

1. Define keywords that are relevant to your website or create relevant webcontent first (to lower minimum bid prices). Group them so one ad text and landing page can cover the entire group. This probably means small groups.
2. Search your own website for each keyword and optimize a high scoring page as the landing page for that keyword or small group of keywords. Do extra linkbuilding and wait for organic ranking first if the minimum bid price is too high.
3. Enter the keywords as exact match and broad/phrase match and supply as much negative keywords as you can think of. Make sure you’re able to measure the exact typed-in search phrases in your web analytics.
4. Create an ad text that is different from all the other ads ranking for those keywords. Click-through-rate is mainly based on: Offering what one searched (ad relevance), offering something seemingly better then the other ads (ad specs) and sticking out from the crowd (ad call-to-action and ad position).
5. Enter the landing page URL exactly as the page scoring in organic search. Without any URL differences you could use to recognise adwords visits.
6. Find out/guess what position other than the first one is highly visible with your ad text sticking out from the surrounding ads. Aim for this position when setting your maximum cost per click. Start bidding high, but when your historic click through rates increase you can lower your bid to keep the same ad position. Adwords also has a prefered position setting, so use this to automatically lower your CPC in time.
7. Set the daily budget high at first so you can do keyword research. If you don’t add all your ads at the same time and finetune before you add another, you can see what keyword potential is available and you get a representative percentage of searches to finetune the different matches.
8. Add the ad group and start by finetuning your search terms. Look at your web analytics and see what exact phrases are used within the broad/phrase match. Enter all of them as exact match, but use negative matches for the ones that are irrelevant for your website. If they are just irrelevant for that particular landing page, create a different ad group with a better landing page.
9. Then finetune your ad text. Enter two or three slightly different ad versions and see what ad text converts best measured in click-through-rate.
10. If one ad is chosen as the winner, reflect that ad text in your landing page. Preferably you should use the same title and description.
11. Once you have almost no clicks on your broad/phrase matches – because you use exact and negative matches that include everything contained in them – then you can activate a second ad group and repeat the whole process.

SEA requires SEO
By doing all the above you get high click-through-rates, high relevance to keep your visitors, low minimum bid prices and lower average cost per clicks. Most SEA agencies do only CPC bid management to increase the effect of your ad and lower the cost. It is about time they include ad and landing page relevance in their routine too.

Indicators of ad and landing page relevance are the same as indicators for organic relevance. Most search engines just don’t use all their organic spam filtering on quality scores because there isn’t that much landing page spam yet. As more sites start influencing relevance in the quality score artificially search engines are bound to add more spam filters and SEA pricing will become SEO work.