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Are you wasting money on search marketing?

15:59 on Mon, 2 Nov 2009 | Conversion | 4 Comments

This blog post could massively increase your online profits. Read on to find out why!

First, let’s talk a little about the history of marketing on the web. Search engine marketing has been around in one form or another since the mid 1990’s. The term ‘search engine optimisation’ was coined some time in 1997 and the AdWords pay-per-click platform celebrates its 9th birthday this month. These dates are probably surprising to a majority of readers, as it has only been in the last few years that search marketing has really been ‘on the radar’ for many as a viable way of increasing brand awareness and online revenue.

With the exception of a small number of ill-informed detractors still stating SEO is ‘snake oil’ sold by scammers, the benefits and cost effectiveness of ethical search marketing are now understood by most savvy businesses. The last few years have seen an explosion in online marketing spend by companies who are seeing a return on investment far exceeding that seen from ‘traditional’ marketing channels such as TV and newspaper advertising, and search engine marketing (SEM) is now a respectable and essential part of the marketing mix.

Now let’s take a look at conversion rate optimisation (CRO). If you’ve not heard the term before, I’m (unfortunately) not surprised. Conversion rate optimisation doesn’t even register on Google trends for search when compared against search engine optimisation, and yet it is one of the most important aspects of any online business.

Conversion rate optimisation is, as the name suggests, using various techniques to help make a website convert visitors as effectively as possible. It’s a concept that is fundamental to offline sales – every retailer understands the importance of presenting products in the best light and making them easy to purchase – and yet it is routinely overlooked online.

So why is search marketing so well known and conversion optimisation isn't? Your guess is as good as mine. Things are changing though, and as much as 2005-6 was the start of the boom period for SEO/SEM, for conversion optimisation that time is coming fast. Here's your chance to get ahead of your competition now, by making best use of every visitor your website receives.

If you’re investing in search marketing and aren’t optimising for conversion, you’re wasting money.

To illustrate my point, and to show exactly how much money you could be leaving on the table, let’s run though an example case study.

WidgetCo (our imaginary company) only sell one product, the Blue Widget. This product costs £60 and WidgetCo offer free shipping and a three year warranty.

WidgetCo have online overheads of £5000 a month for the cost of running a website and staff to manage it, and the website currently attracts 10,000 visitors a month. They currently sell 100 Blue Widgets a month (a conversion rate of 1%)

Without search marketing or conversion optimisation:

• £5000 overheads
• 100 units sold at £60 per unit
• £6000 revenue
• £1000 profit

Not hugely impressive figures. Realising that there are a lot more potential customers out there, WidgetCo invest £2000 a month for a search marketing campaign which, through organic and paid search, doubles their traffic to 20,000 visitors a month, and sales increase accordingly.

With search marketing:

• £7000 overheads
• 200 units sold at £60 per unit
• £12,000 revenue
£5000 profit - an increase of 500%

Not bad! By commissioning an effective search agency, WidgetCo have increased their online profits by 500%, which has made the website an important part of the business. Realising that the website may not be performing as well as it could, WidgetCo now work with their agency to implement a conversion optimisation campaign, which involves design changes along with optimised copy and user testing. The investment of a further £2000 a month doubles the conversion rate of the website from 1% to 2%.

With search marketing and conversion optimisation:

• £9000 overheads
• 400 units sold at £60 per unit
• £24,000 revenue
£15,000 profit - an increase of 1500%!

By implementing both search marketing and a conversion optimisation campaign, WidgetCo have increased online profits 15 fold without increasing prices or having to cut costs. By improving the website conversion rate, less site traffic was 'wasted' to people not converting to a sale, and WidgetCo can now work to continue growth of search traffic and conversion rate to become even more profitable.

As an extra benefit, the improved website and easier purchase reduces the need for pre-sales support by WidgetCo, not to mention happier customers who are far more likely to repeat order or recommend WidgetCo to a friend!

Fictional companies aside, I hope this blog post has inspired readers to consider the benefits of conversion optimisation. As well as being an essential partner to any search marketing campaign, it can improve your customer loyalty, reduce support costs, increase long term profitability and equally as importantly improve customer satisfaction with your brand.

Feel free to ask any questions you may have in the comments below, or contact us for more information on conversion optimisation!
 

Comments & Discussion

(4 Comments)

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Mark

Mark • Years ago

Hi Simon,

Thanks for the comment. In the bigger picture, the CRO changes made would be permanent, so the increase in sales would be "for life".

Measuring ROI over a static period is helpful, but not reflective of the value of CRO, as WidgetCo would be benefiting from the increased sales for years to come with no extra investment.

Out of interest as well, I've worked with a client (albeit in the fashion industry) with an average 700% markup on products!

Reply

Simon

Simon • Years ago

Rob I agree this is a great idea, sorry to be picky but unless Widget Co make or buy the product for nothing the example wont work.
If you make at best an average 50% profit on the £6000 of sales (more likely to be 25%) this equates to £3,000 profit, so the company would be running at a loss initially and in your second example.
It would only be when they achieve sales as per example 3 would they be making a profit.
But i get what you mean and think it is a good idea as long as it is cost effective.

Reply

Rob Welsby

Rob Welsby • Years ago

Hi Alex, good question!

Every website, target market and business is different, and conversion optimisation needs to reflect this.

Having said that, there are some common steps in many conversion optimisation campaigns:

1. User testing on target market to gain feedback and identify usability issues with the website

2. Research and consultation with 'offline' sales staff to identify common customer questions and objections (concerns which stop them converting) - then working to address these on-site

3. Expert conversion review of website to streamline conversion pathways and make it as easy as possible for visitors to convert - recommendations based on experience and research.

4. Test, test, test! All solutions should be tested with a tool like Google Website Optimizer to see how much the proposed change effects conversion rates - some results will be surprising.

in addition, there are various online tools which can be used to help get a better understanding of how visitors are using your site. A couple of simple examples:

http://crazyegg.com/ - Click 'heat maps' can identify where visitors are clicking on your page. Are they clicking things that look like a link but aren't? Are they navigating the site how you envisioned?

http://www.4qsurvey.com/ - A simple, 4 question survey you can implement for FREE on your site to start collecting user feedback.

In our experience, a doubling of conversion rate is a very achievable target for websites which have not been previously optimised for conversions.

Hope this answers your question!

Reply

Alex

Alex • Years ago

can you describe some of the commonly used conversion optimisation strategies that WidgetCo would have paid for to see that sort of growth in click-thru sales?

Reply