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SEO ROI & THE CONVERSION RATE DILEMMA

What do legitimate search engine optimization firms charge? Like most things involving the Web, prices are all over the place but if the price is extremely low you can be assured that the quality of the service will match the price.

If you do a search for SEO pricing from reliable search engine firms, you will find that although prices vary greatly fees of $2,500 per month on an annual contract ($30,000 per year) are not uncommon. Of course some firms will charge less and others will charge a great deal more depending on where they are located, the size and condition of your website, and exactly what services you want them to provide.

Are SEO Costs Worth the Investment?

So what do you get for your $30k ante? Legitimate SEO companies will provide things like target market analysis, keyword analysis, content massaging, code modifications, link implementation strategy, and metric analysis.

And what happens when Google changes their algorithms? Well you guessed it. You have to ante-up again and the addiction continues. Search engine optimization has become the crack-cocaine of Web-based businesses.

Keep in mind search engine optimization's main goal is to increase your visibility and ranking in search engines which assumes more traffic to your website; but the leap from visibility to traffic to sales conversion is higher than you think. The assumption that better search engine visibility and more traffic automatically generates more sales is faulty logic.

Even if increased search engine visibility produces more traffic to your site and even if your website contains genuine content; if the presentation of that content doesn't engage the viewer quickly and if it doesn't hold the visitor's attention for two to three minutes with a compelling and even entertaining presentation, then your chances of converting that visitor to a customer are minimal.

How Much New Traffic Is Needed to Pay for SEO?

Let's say your search engine tactics actually work and they not only increase your search engine ranking but also drive tons of traffic to your site. With realistic conversion rates at about 2-3%, how much traffic do you have to bring in to actually pay for the SEO expertise.

Based on a $30K annual investment in SEO and a 20% Net Profit you must generate $150,000 in new sales just to pay the SEO fees. And at a 3% conversion rate and an average sale amount of $100 per transaction that translates into 50,000 unique new visitors per year to your site just to pay for your SEO strategy, and you still haven't added one cent to your bottom line. You can do the math.

SEO Investment Break-Even Formula

SEO Generated Unique Traffic Break-even = SEO Cost / Conversion Rate x Average Sale x Net Profit Percentage

Determining Your Conversion Rate

Every business has a different Average Sales Amount and generally speaking it is safe to assume the higher the Selling Price the lower the Conversion Rate. In order to figure out what your Conversion Rate is you have to do a little more calculation. Lets say a company brings in a total of $150,000 in Web-Sales and attracts 25,000 Unique Visitors per year and has an Average Sale Price of $395.95; their Conversion Rate would be 1.5%. What's your Conversion Rate?

Conversion Rate = [(Total Web Sales / Unique Web Traffic) / Average Sales Price] x 100

To test the formula, we can check the original example where we have a given Conversion Rate of 3% to see if we arrive at the same rate:

CR = [(150,000/50,000)/100] x 100] Conversion Rate = 3%

The Meaning of It All

After calculating your own numbers, different readers will come to different conclusions. People seem to be mesmerized by complex statistics and bean counter analysis but the hidden meaning behind all the number crunching and mathematical machinations seems clear: if you want to make more money from your website the trick is not where you appear on a search engine or even how many unique visitors you attract to your site, but rather how many of these visitors you convert into customers. If you have a marketing budget, it should be spent on conversions; and conversions are not the primary concern of search engine optimization. What you really want is a strategy that will increase conversions.


About The Author
Jerry Bader is Senior Partner at MRPwebmedia, a website design firm that specializes in Web-audio and Web-video. Visit www.mrpwebmedia.com/ads, www.136words.com and www.sonicpersonality.com.

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