Search engine pay-per-click (PPC) ad prices are rising. If your Web business relies heavily on search engine marketing (SEM), you may already feel the crunch.

Marketers often abandon certain search terms because the cost rises above their ability to achieve a reasonable return on investment (ROI). In-demand terms are often too expensive to be worthwhile. Soon, demand will place many keywords out of reach of everyone excepting those with the deepest pockets.

What about organic SEO (define)? This week, a few tips regarding ever-important SEO, its relationship to conversion rates and ROI, and shopping for an SEO firm.

PPC Inflation Is Real
The Keyword Price Index is published monthly by leading search engine marketer Fathom Online. The October index shows an overall 14 percent increase in keyword price, from September’s average of $1.37 per keyword to $1.55 in October. According to the index, October was much more costly than September. Average keyword prices for consumer services (e.g., entertainment and spas) rose from $0.54 to $0.96 (78 percent). Retailers saw higher prices, too, from $0.32 to $0.48 (52 percent).

Some verticals saw prices drop. In the automotive industry, the average price went from $1.43 to $1.39, a 10 percent decrease. Telecom/broadband keywords fell from $1.89 to $1.78 (5 percent).

Organic Search Costs Also Inflate
Organic optimization costs are also rising. Sometimes, the price is just too high to pay.

Sports coaches use certain metrics to monitor how a team is performing. In basketball, one measure is the number of rebounds a team pulls down in the course of a game. In football, it’s possession time. In SEO, it’s a given keyword’s or keyword phrase’s listing position.

Yet a number-one position within the major search engines doesn’t necessarily mean you’re winning the game.

A highly optimized page like this one is so incoherent, its ability to convert or persuade is “optimized out.” It’s optimized for search engine spiders, not humans. That would be great… if we could convert robots!

Optimization efforts such as these inflate keyword cost in terms of what you pay an SEM firm, as well as effort versus return. It’s gotten to the point where winning a prime position in search engine listings can actually damages sales.

Highly technical SEO work should always balance visitor and business goals. Never abandon those goals in the name of search engine position.

Blogger Anil Dash recently proved “a page that’s read by people instead of robots is going to do better.” Dash should know; he recently won an international search engine placement contest with one measly post. No metatags. No worries about keyword density. No optimization.

Beware of SEO efforts that force you to abandon common sense in the name of position.

Search Engine Marketers Aren’t Miracle Workers
Beware the SEO firm that offers miracles.

It’s practically impossible for even the most gifted SEO specialist to optimize a page to top ranking on popular search terms. The reality is top-ranking pages for certain popular and seemingly lucrative terms are dug in and will remain dug in short of total search engine algorithm overhauls. Research indicates broad and popular terms are simply out of the average site’s reach.

According to search engine guru Mike Grehan, higher ranking sites and their rich collection of incoming links only stand to get richer from a link perspective:
 It’s what[’s] known as clustering. We tend not so much to have friends as we do groups of friends, based on shared interests, experience and location, all of which overlap with other groups. And this is an almost universal feature, not just in social networks, but of networks in general.

Entering a search term and clicking on a high-ranked page perpetuates this by effectively increasing the clustering effect.

Search Engine Promises Too Good to Be True
SEO firms should be completely honest with you about the prospect of keywords you wish to dominate. They can’t always get your site in the top 10, especially if the keyword’s a popular one.

Optimizing for less popular or more complex search terms may yield more conversions and ultimately, a great ROI. But don’t employ a firm that only optimizes for more complex terms.

Traffic vs. Sales
I’ve said it before, and I’ll say it again: Selling yourself on the idea that more traffic will solve your problems, or letting someone else sell you that idea, is selling yourself short. Improve your customer conversion rate and you’ll enjoy more sales and more profits from whatever traffic you get.

By Bryan Eisenberg

The Internet is a popular way to acquire customers. Of course, companies must ask themselves, “How much should we spend to acquire these customers?” The CFO tells you to spend only what you can “afford.” Media companies tell you to spend as much as you can afford, and then some. Now that the Internet has some history behind it, proven techniques can rationally approach this problem.

How much you spend depends on five factors: strategic phase or business goals; financial requirements; customer definition; the firm’s online advertising experience; and cross-channel marketing opportunities.

Strategic Phase
Let your business objectives guide you:

* New company or market. For a new business, growing a user base is an investment. Be willing to spend any money you make after covering variable costs, the costs associated with producing or acquiring your product and getting it to the customer (this is the contribution margin). Short term, a company must cover these costs to stay in business. Investors won’t support a business with negative cash flow indefinitely. That’s what you’ll have if you don’t cover all your costs.

* Mature business. Established companies often have acquisition goals and financial metrics that target revenues and profits based on past experience. At a minimum, acquisition results must break even. Hopefully, they contribute to profits in the near term. In this context, marketing costs should be less than or equal to revenue, minus other expenses (e.g., variable costs, premiums, and allocated overhead). In direct marketing, this is called a marketing allowable.

 * High-growth or competitive market. A high growth phase business has a limited window of opportunity, so senior management may elect to invest in advertising to grow market share. Similarly, in a very competitive market, such as online travel, a business may continue to invest in advertising to maintain or grow its share. Not investing may erode the current position and customer base. A parent company may absorb losses because it views market share in one product as a strategic necessity for related products or its future strategic direction. At a minimum, customer acquisition shouldn’t cost more than the revenue streams customers yield; preferably, they should cover their variable costs.

Financial Requirements
Cost-conscious businesses are often expected to break even within the year (i.e., net sales - variable costs - marketing - overhead = 0). New customers must generate sufficient revenue (after returns) to cover variable, marketing, and overhead costs. In reality, it often takes several promotions to cover the initial ad investment. Generally, the cost to acquire a customer is more than the contribution margin on the initial sale. Therefore, it’s helpful to examine customers over a longer period.

Customer Definition
To many marketers, customers are people who purchase products or services from their companies. At this point, customers generate some revenue but may not yet have yielded a profit. Some companies don’t consider a buyer to be a customer until the second purchase. Long term, customer value must exceed the stream of revenue from purchases minus associated variable, marketing, and overhead costs adjusted for the time value of money. (This is roughly equivalent to lifetime value.)

Ongoing marketing is less expensive than acquisition marketing since customers know your brand and offering, and you have their contact information and permission to get in touch. Selling additional products to existing customers can be less expensive.

Online Advertising Experience
If you haven’t already run an online advertising campaign, you must test creative, media, and landing pages to achieve efficiency. Early campaign test costs run high until you learn where and how to modify advertising to yield better acquisition rates. Many advertisers forget to budget for testing. Without past experience, you must rely on your best judgment and industry averages for similar products. Understand actual results may vary significantly.

Cross-Channel Marketing Opportunities
By not considering your advertising’s impact on multiple distribution channels, you may understate its total value. There are two different aspects to consider and measure: the online impact of your offline advertising and the offline impact (e.g., phone and retail) of your online advertising. To capture this information, ask customers where they found out about your firm, use a special URL, or provide an incentive for sharing this information.

Five Ways to Increase Return on Acquisition Investment
If online acquisitions spend exceeds budget, you can extend customers’ value (understand, these methods may not be sufficient to support customer acquisition independently):

 * Build a double opt-in e-mail list. Build the list as part of the acquisition process or with visitors who don’t purchase during an initial visit. Use the list to build a relationship with customers and prospects for a relatively modest cost.

 * Cross- or up-sell other products. Use confirmation e-mail, ongoing e-mail messages to the customer list, or ride-along promotions with fulfilment. The customer base can form a test group for new products or campaigns.

 * Implement a formal customer referral program. This can be as simple as asking customers to forward coupons or other content to friends. Or, use an incentive to get customers to refer friends. Consider rewarding both existing and new customers for referrals.

 * Develop third-party advertising vehicles. Customers in purchase mode make better prospects. Act like a publisher and carry third-party advertising on your Web site. Also put related, non-competitor inserts in your shipment packages. Offline direct marketers have been doing this for years.

 * Use co-registration with a related company to expand your house file. As part of your registration process, customers can sign up for your partner’s list. They can sign up for your list when registering with your partner. This should help cost-effectively grow your list but may require additional marketing.

In today’s cost-conscious world, you must balance acquisition costs with customers’ long-term contributions to your firm’s bottom line. This isn’t just a set of financial tradeoffs. Acquisition investment’s true value is customers’ profit margin over time, the customers they refer to you, and their positive word of mouth supporting your offering. In this consumer-centric marketplace, consider how to nurture and enhance this relationship over time. Consider all strategic assets, including your house file, to maximize return on investment.

By Heidi Cohen

As you may know, search engine marketers often focus on building new content and new “windows of opportunity” by increasing the visibility of a Web site in the major search engines.

In this article today, I would like to share a few thoughts about how you can also increase your business or improve your business, even before those new windows of opportunity take effect. After all, search engine robots run on their own schedule, so we want to think about how we can make other small changes to a Web site to improve business in the short term, while we may be waiting for those robots to come index our content. So let’s look at a few alternative (non-SEO) things you can do right now, while waiting for your latest optimization strategies to kick in.

What are you doing with the traffic you have now?
1. One way to increase “business response” with your current traffic is to offer a special promotion. This could be a seasonal promotion, a special offer or a discount on a product featured prominently on your home page. Offer something that is popular at the right price but don’t offer too many choices. Something priced for the spontaneous buyer.

2. To increase “business response” with your current traffic you could analyze your current traffic trends with attention to your busiest pages. Identify the ideal locations for placing a seasonal promotion, based on your busiest entry pages. If you don’t ever test your ideas you’ll never discover how powerful small changes can be sometimes.

3. Give your current audiences a reason to come back again over and over again using a sequential auto responder like www.aweber.com. You might offer readers a free report, a newsletter or a series of lessons or something else of value.

4. Are there products on your site that could benefit from a little emotional content? Remember the Web has multi-media potential to offer. Have you ever thought about spicing up your content with a video tutorial or something fun using a product like Visual Communicator from www.seriousmagic.com

5. Are there some new useful “tool related” resources you could offer your current audience? People are always looking for things like “mortgage calculators” or “distance calculators” or other tools.

6. There is the age old, but ever effective bonus of offering free shipping on a product.

7. Have you revisited your various products� sales pages and thought about beefing up the emphasis in your sales copy on the “benefits”. A little change in dialogue can go a long way. Test your ideas and learn what works most effective for you. Sometimes it’s the tiniest changes that make the biggest difference.

8. Have you tried writing a product’s sales copy to appeal to a “specific” niche audience? One of the most powerful things you can do is write dialogue for a niche audience and build relevant, valuable content that presents your product or service as a solution.

9. Have you gone into Wordtracker.com to explore your target audiences searching behaviours to look for new niche opportunities? Have you read Wordtracker Magic ? Now that you have researched new keyword combinations, begin to shift your mindset and begin studying your buying audience’s search behaviours.

10. Have you ever consider offering some complimentary affiliate related products that would appeal to your existing audiences. (You would just take the commission and let your affiliate partner handle the shipping and customer service). Very popular strategy with search engine marketing professionals these days. Have a look at a place like www.cj.com

• Can You Change Your Visitor’s Response by Becoming More Creative?
• There are plenty of ways to improve the way you deliver information to your visitors.
• Are there ways to better demonstrate the benefits of your products or the value of your services?
• Are there ways you can present your information with a more original spin?

There are lots of (non-SEO) related resources which you could use as building tools to test your ideas, involve your visitors more interactively or demonstrate value.

Let’s explore a few creative fun things:
11. Have you thought about the power of using audio testimonials to your Web site with a service such as www.instantaudio.com which provides you with unlimited potential and they even give you your own 1-800 Toll free numbers so your customers can talk about your business. The power of the spoken word is powerful!

12. Instead of creating a boring Flash Movie or sales commercial, have you ever though of creating an educational animation that teaches your visitor something useful and original? If it is useful enough and original enough, don’t be surprised if people start linking to it.

13. If you’re looking for professionally made Flash Movies try looking at www.bigshotmedia.com or at the same resource you’ll find complete “footage cds” which reflect lifestyle type video under different categories.

14. How about building some humour into your site if appropriate? You might explore software that allows you to make any photograph talk: http://www.reallusion.com/crazytalk

In Summary:
These are just a few ideas and suggestions which may help you. There are plenty more too. Just remember that as important as gaining visibility to the right audience is, so can you also gain more business and profit by thinking about the response factors and triggers that result in someone taking action at your Web site. You need both visibility to the right audience and you also need that audience to respond or take action. If you get that same identical audience to respond “more often”, it’s perfectly good business too.

Why should you not enjoy more business, while you are growing and improving your visibility?

By John Alexander