|
Choosing
The Right Strategy
For Your Online Business
Pay for Inclusion versus Pay per Click
© 2003 By Richard
Zwicky
Back in the
old days of the Internet - in 1993, - there were 284
locations on the entire World Wide Web. According to Bill
Clinton, only 8 of them ended in .com or .net when he was
sworn into office. As of January 1, 2003, there were
171,000,000 domain hosts in use. In 1995, the largest search
engine database was Altavista, and it had most of the
Internet categorized. Today Google and FASTsearch own the
largest databases. Yet neither one of them has even 10% of
the Internet covered. It's estimated that more than
8,000,000 web pages are added to the Internet every day.
None of the search engines are able to keep up to that pace.
So how will your website stand out? How will it acquire the
traffic it needs to succeed? There are many ways to approach
the issue of marketing an online business, but for the sake
of this article, we'll concern ourselves solely with online
tools, and ways to expedite success. In that vein, we'll
concern ourselves with Pay for Inclusion and Pay for
Placement (or Pay per Click) advertising
What
is Pay for Inclusion?
Some engines, such as AltaVista, Inktomi, Looksmart and
FAST, use a pay for inclusion model. What this means is that
to be guaranteed to be found within that specific search
engine index, the website operator must pay a fee to be
listed. It's similar to the fee a business pays for a Yellow
Pages listing. These fees vary from monthly to annual.
Looksmart charges a listing fee, plus a fee of $0.15 per
clickthrough.
Engaging a Pay-for-Inclusion service does not come with
any placement guarantees. If your website is not properly
optimized, but you paid an inclusion fee, it is guaranteed
to be indexed and listed somewhere within that search
engine. If you want to ensure success with a
Pay-for-Inclusion search engine, then your website must
still be optimized. Without proper optimization, which
includes an analysis from the perspective of all the factors
that the search engines look for, a pay for inclusion
service will not deliver the desired benefits to the website
operator.
When properly matched with a comprehensive Search Engine
Optimization regimen, a Pay for Inclusion program will
result in powerful results: Qualified Traffic, Customers,
and Relevant Traffic.
What
is Pay for Placement, or Pay per Click?
Pay per Click advertising is the process by which a web
site operator can arrange for a website to be placed in a
pre-defined position within certain search engines, such as
Overture.
Search Engine Placement is always a Pay-Per-Click
solution. While advertising websites are only permitted to
buy advertising in search queries that are relevant to their
content, they are not sorted by relevance but rather purely
based on bid value.
Pay per click services allow advertisers to bid for each
visitor directed through to their web site, based upon the
number of clicks the ad receives. Pay per Click search
engine placement should be realistically viewed for what it
is - an online auction. Advertisers bid against each other
for a fixed position within a list of search results. The
advertiser who bids the most is given the top spot in the
list. Each advertiser bids according to their budget, and
has to know his or her Return On Investment (ROI) to
determine how much money should be spent on acquiring new
customers.
How
Do I Know Which Strategy Is Right For My Website?
For those advertisers where the ROI is sensible or
worthwhile, pay per click search engines are valuable
customer acquisition tools. But is it right for you? While
it can be expensive, here's a way for you to easily
determine the ROI for your online business, and determine if
it is the right choice for you. Take out a sheet of paper,
and at the top of the sheet mark down the average price of
the goods you sell - we'll use $100.00 for the purpose of
the example. >From that number, make some simple and
basic calculations, outlined here:
1. $100.00
2. (-$ 50.00) Cost of Goods
3. (-$ 5.00) Transaction Cost (bank charges, credit card)
4. (-$ 8.50) Shipping Fees (This assumes you're delivering a
product, it needs a box, label, and has a delivery cost.
5. (-$ 10.00) Customer support costs - time on phone, email,
etc...supporting and processing the transaction. What's 1
hour of your time worth?
Margin = $ 26.50
Assuming this margin is correct for your website, is a
Pay per Click campaign right for you? You'll need to look at
your stats to judge this properly. You need to determine how
many of your visitors are converting into buyers. IF your
website has a 4% conversion rate, and your category is
moderately competitive, you will probably need to budget at
least $1.00 per click to get spot #3. Spot #3 is important
because more often than not it's the top 3 spots per page of
search engine results that are reserved for Pay per Click
advertisers.
Assuming your website gets into the top three spots,
here's how the math works if you get 100 clicks in a month.
Since it's all percentage based, the same holds true if you
get 25 clicks or 10,000 clicks.
100 clicks @ $1.00 per click = $100.00 cost.
4% conversion = 4 sales = 4x $26.50 (margin on sale) =
$106.00
Cost = $100.00
Margin = $106.00 Profit = $ 6.00
So, if the above were true, and IF the pay per click
advertisement sent you 100 visitors per month, you would
make $6.00. Would you make much less having spot #4 instead
of spot #3 ? If it meant one less sale a month, that would
be worth it. You would make $70.00 more by selling less!
Does spot #3 get much more traffic than relevant results in
spots 4 through 10? Not at all for spot # 4, 5, 6, and only
a little bit more for spot #'s 7-10. Remember, people
usually look at the title or site description to see if it
is relevant. Pay per Click is worth the money if your
website is not found under any relevant queries in the top
20, but its value drops quickly if a website is found easily
in the free listings within the search engines.
Is
Pay for Inclusion Less Expensive?
If we use the same calculation as above, and your website
had 4 sales from a pay for inclusion engine where you paid
$39.00 per year, or $3.25 / month, your profit would have
been $103.25.
What
About The Cost Of Search Engine Optimization?
Search engine optimization does not have to be expensive.
You can do the work yourself, but you need to ensure that it
makes sense to do so. By this I mean, is doing it yourself a
cost efficient, business proposition? Any time that you as
an individual put into search engine optimization is time
that you take away from business fundamentals and
essentials. It's time away from customer support, content
creation, service, administration, product research, other
marketing, etc... What is that time worth? It's got to be
part of the ROI calculation too. More and more people are
choosing to outsource this work. It's estimated that 70% of
online businesses will outsource non-core operations this
year. It only makes sense. It's smart business to focus on
what you know and do well and to hire others to support you
in the other areas. Not many smart businessmen write their
own contracts - they get their lawyer to do it. They want to
ensure it's done right. Doing it right in the first place
saves money in the long run. Outsourcing means getting
someone else to do the work for you, properly. It does not
mean getting someone to tell you what to do, or how to do
things.
What's
Right For Your Website?
In the long run, a website operator that has a well
optimized website will beat out a non-optimized website that
concentrates on Pay per Click advertising for customer
acquisition every day of the year. He may make fewer sales
in a year, but he will make more profit from each sale. If
the website is properly optimized, it will enjoy better
placement in more search engines. This means it will
survive, and prosper in the long run.
-----------------------------------------
ABOUT THE AUTHOR:
Richard Zwicky is a founder and the CEO of Metamend
Software, a Victoria B.C. based firm whose cutting edge
Search Engine Optimization software has been recognized
around the world as a leader in its field. Employing a staff
of 10, the firm's business comes from around the world, with
clients from every continent. Most recently the company was
recognized for their geo-locational, or LBS technology,
which correlates online businesses with their physical
locations.
|
Adlandpro
Toolbar gives you instant access to your
Free Email Account, Free Website, submission to
over 8,900 sites, learning tools, free discussion
list on marketing and promotion with 26,000
subscribers, Free 5 day Website Success course by
email, plus instant search. Click
Here. |
|