ISM SEO
09-01-2008, 05:58 AM
In 2008 IProspect (http://www.iprospect.com/) conducted a study with Jupiter Research (http://www.jupiterresearch.com/bin/item.pl/home/) to uncover data about how search engine users behave when they conduct different types of searches. Among the findings:
68% of search engine users click on the first page of results, up from 48% in 2002
92% do not go beyond the first three pages of search results compared to 81% in 2002
Conversely, only 8% click past the third page compared to 19% in 2002
The trends demonstrate how it is increasingly more important for dealers to appear within the first three pages of search results, and particularly on page one. Many dealers now budget thousands of dollars in SEM (PPC Advertising) every month in search of the number one position on the Search Engine Results Page (SERP) for their dealership brand name.
PPC is the fastest, easiest way to the top of the page, but is it the best strategy? Consider the following three ways to evaluate SEO vs. SEM:
Converting Clicks to Sales
Generating Traffic
Return on Investment
Before being acquired by OMNITURE (http://www.omniture.com/en/) a PPC company analyzed more than 57 million search engine visits to major business-to-consumer e-commerce sites. The results showed a conversion rate of 3.40% compared to 3.13% for organic search results - a 9% edge in conversion rates over organic search. These rates far exceed the overall conversion rate of about 2 percent for most e-commerce sites. However, while 9 more visitors out of 100 take the desired action in this study, how many visitors to a dealership website actually purchase during that visit? For us a conversion, or desired action in effect is just submitting a lead. SEM Converts More Clicks to Sales
The same IProspect study found that experienced Internet users prefer natural results over paid search and that 60.5% of all users find organic (SEO) search to yield more relevant results than SEM. In support of this finding is a study conducted by OneUpWeb (http://www.oneupweb.com/) documenting the fact that users are 6 times more likely to click on natural search results than paid results. SEO Generates More Traffic than SEM
It would seem that natural search traffic is free, but SEO does carry costs such as manpower and lost opportunity when handled internally. Third party services for such expertise do not come pay per click advertising can get very expensive. Since profitability is the most important consideration, let’s do the math.
If you use the term “Nissan dealers Chicago” you pay $6.86 every time someone clicks on your ad while the current cost of “Nissan Dealership” is $4.31. If you split the difference at say $5.50 and bring in 100 visitors per month you’ll have spent $3,300 over 6 months. Based on the 3.40% conversion rate you’ll have generated 20 leads to your Internet Department and industry pundits suggest that Internet closing ratios average around 12%. So after 6 months you’ll have sold the equivalent of 2.4 units.
A good SEO campaign over the same six months will require an investment around $12,000. If successful, the search engine users are 6 times more likely to click on natural search results than paid search generating 3600 clicks, at the lower 3.14% conversion rate producing 113 Internet leads. Using the same 12% closing ratio results in 13.6 sold units. Your investment of $12,000 in SEO, roughly 4 times the SEM expense generates more 5.6 times the number of units sold . ROI – SEO is More Profitable
For both paid and organic search, you have highly qualified traffic that converts far above the overall conversion rate of about 2 percent for most e-commerce sites. With paid search, dealership have better control over the environment, including the message, the landing page and the ability to eliminate low-converting keywords. There is a strong synergy between paid and organic search. The bottom line is that dealers need to optimize both to achieve maximum results.
68% of search engine users click on the first page of results, up from 48% in 2002
92% do not go beyond the first three pages of search results compared to 81% in 2002
Conversely, only 8% click past the third page compared to 19% in 2002
The trends demonstrate how it is increasingly more important for dealers to appear within the first three pages of search results, and particularly on page one. Many dealers now budget thousands of dollars in SEM (PPC Advertising) every month in search of the number one position on the Search Engine Results Page (SERP) for their dealership brand name.
PPC is the fastest, easiest way to the top of the page, but is it the best strategy? Consider the following three ways to evaluate SEO vs. SEM:
Converting Clicks to Sales
Generating Traffic
Return on Investment
Before being acquired by OMNITURE (http://www.omniture.com/en/) a PPC company analyzed more than 57 million search engine visits to major business-to-consumer e-commerce sites. The results showed a conversion rate of 3.40% compared to 3.13% for organic search results - a 9% edge in conversion rates over organic search. These rates far exceed the overall conversion rate of about 2 percent for most e-commerce sites. However, while 9 more visitors out of 100 take the desired action in this study, how many visitors to a dealership website actually purchase during that visit? For us a conversion, or desired action in effect is just submitting a lead. SEM Converts More Clicks to Sales
The same IProspect study found that experienced Internet users prefer natural results over paid search and that 60.5% of all users find organic (SEO) search to yield more relevant results than SEM. In support of this finding is a study conducted by OneUpWeb (http://www.oneupweb.com/) documenting the fact that users are 6 times more likely to click on natural search results than paid results. SEO Generates More Traffic than SEM
It would seem that natural search traffic is free, but SEO does carry costs such as manpower and lost opportunity when handled internally. Third party services for such expertise do not come pay per click advertising can get very expensive. Since profitability is the most important consideration, let’s do the math.
If you use the term “Nissan dealers Chicago” you pay $6.86 every time someone clicks on your ad while the current cost of “Nissan Dealership” is $4.31. If you split the difference at say $5.50 and bring in 100 visitors per month you’ll have spent $3,300 over 6 months. Based on the 3.40% conversion rate you’ll have generated 20 leads to your Internet Department and industry pundits suggest that Internet closing ratios average around 12%. So after 6 months you’ll have sold the equivalent of 2.4 units.
A good SEO campaign over the same six months will require an investment around $12,000. If successful, the search engine users are 6 times more likely to click on natural search results than paid search generating 3600 clicks, at the lower 3.14% conversion rate producing 113 Internet leads. Using the same 12% closing ratio results in 13.6 sold units. Your investment of $12,000 in SEO, roughly 4 times the SEM expense generates more 5.6 times the number of units sold . ROI – SEO is More Profitable
For both paid and organic search, you have highly qualified traffic that converts far above the overall conversion rate of about 2 percent for most e-commerce sites. With paid search, dealership have better control over the environment, including the message, the landing page and the ability to eliminate low-converting keywords. There is a strong synergy between paid and organic search. The bottom line is that dealers need to optimize both to achieve maximum results.