Unless you’ve got a time machine, it’s not always realistic to achieve a sustainable CPA (cost per action) by way of paid cost-per-click online marketing channels alone. This post offers a pragmatic multi-channel scenario to prove the significant financial benefits of SEO, social media, and public relations for CPA-pumping traffic and conversion. In the early days, target CPAs were usually attainable solely by paid online advertising. That said, for years we’ve advised clients to establish their customer base while advertising costs in new channels remained low. For instance, in 1999 and 2000 the rising cost of Overture PPC blew our doors off as the bargains waned. Early adopters who had already built their brand with inexpensive/high yield pay per click were already hooked up. Others were left in the dust.
The phenomena of continual cost increases, commensurate to new advertising channels’ growth, proved especially radical in 2003 and 2004 as Google’s AdWords search PPC program steadily increased in cost. The 2X-4X per-click cost upsurges were no surprise to those early adopters, who realized the emergent PPC channel’s value. Starting in 2008, aimClear counseled clients to leverage Facebook’s massive growth before the general business public caught on to the might and focus of social graph PPC. We were oh-so right. The $0.30 cent click in August ‘08 now can cost upwards of $3.10. Hate to say, “We told ya so…”
Yes, there have been killings to be made for online marketers who embraced nascent channels and rode them to glory, but those splendid days are long gone. For many products it’s just no longer possible to attain reasonable target-CPAs with paid advertising alone. Sure, AdWords, Facebook Ads, Microsoft Ad Center, YouTube, boutique CPM banner buys, emergent mobile networks, trade desks and other paid advertising channels offer fertile and focused marketplaces, but the cost of these channels alone or in combination, in many cases is just too high now. More than ever, diluting the CPA to a reasonable price absolutely requires SEO (search engine optimization), social media, public relations and other classic means to drive focused website traffic and conversion. Ready? Get our your calculators out marketers. Here we go!
Make Projections, Channel By Channel
More and more, prospective paid advertising clients are coming to us with a target CPA and projected conversion volume that’s based on fantasy as opposed to what can actually be accomplished with only paid. Don’t get me wrong… we’ll strive for any goal remotely possible with vim and vigor. That said, you might wish for 5,000 monthly conversions at a sub-$15.00 CPA and less then $80K of total monthly expense including agency fees, but wishing does not make it so. The reality is that these days target-CPAs are evermore dependent on other marketing modes a la SEO, PR and PR driven news.
The best starting point to determine how much organic lift is required is to look at each paid channel and do realistic projections. As a caveat, be mindful that projections in any channel are vertical-dependent and should be expressed as a range of possibilities. One marketer’s overpriced conversion is another’s insanely cheap win. We’ll start with reasonably attainable numbers in an “average” vertical, if there is such a thing. In each channel we may be able to sharpen both CTR (click through ratio) to lower the CPC and then tweak landing page conversion. But for now, we’ll examine reasonable projection points to start the discussion. For the purpose of this exercise, we’re aiming at monthly numbers that are on the lower side of very good.
Let’s start with Google AdWords. We’re commencing with only 400K monthly impressions because, for our hypothetical KPI, we’ve limited the fruit of our keyword research to true “shopping” searches where users clearly demonstrate conversion intent.
Great! Let’s do projections for the next paid channel, in quest of our target-CPA and conversion volume. Facebook Ads are an entirely different animal. Featuring high impressions and much lower CTR, when done properly, conversion can rival search. Interestingly enough the high impression volume tends to impact search channels with branding power. Realistically, to be most focused, conversion count from Facebook Ads may be lower with a higher CPA. It stands to reason. As awesome as FB social graph targeting can be, it’s still contextual or “walk by traffic” and not quite as focused always as search laced with obvious intent. The numbers below are a bit ambitious but doable for shrewd marketers.
When wielded in the right hands, Google’s contextual product, the “Display Network,” can yield results roughly analogous to Facebook display. We’ll project 12 million impressions. The statistics below are common. The Display Network’s targeting is not quite as focused as Facebook Ads so, in our experience, it converts at a slightly lower rate. Again, keep in mind that every one of these channels is vertical-dependent and should be projected in a range of scenarios. Higher CTR in the Display Network is possible.
For some products, especially B2B that can be targeted to certain occupations, LinkedIn Ads can be an effective channel. LinkedIn Ads are overpriced but can be used to push conversion volume and brand if you don’t mind hurting the overall CPA a bit. Volume and branding matter so let’s include LinkedIn. We’ll keep things totally focused and only plan on 2 million monthly impressions. The CTR will be lower and CPC higher. Though the overall expense is relatively low, LinkedIn would be the first channel to eliminate to lower the cost in this scenario. However, our tests show that LinkedIn’s branding effect seems to lift search CTR and conversion enough to justify the small amount of conversions at a higher CPA. That’s a whole blog post in itself.
Dial in typical Bing/Yahoo! search. The impressions are less than Google. Since it’s search, the CPA will likely be attractive compared to other channels in the paid advertising mix.
SEO Factor: Existing Organic Blended With CPC Channels
Most of these paid case studies also include at least one organic traffic source at some level. Often the main website is not fully optimized for discoverability, CTR from SEO and conversion, but still performs to an extent. Once your credentials are verified, Google Webmaster Tools provides a high level overview of impressions and CTR data for the most prevalent organic queries driving traffic to your site. It’s not a complete picture, but is still quite helpful.
Here are metrics of an established site sporting SEO results that could be considered underperforming. The fact that there are only 20K monthly visitors is not a red flag on it’s own, though we’d like to see a higher visitor count. The low organic CTR and conversion site-wide are much bigger problems. Perhaps the title tags are optimized to rank and not focused on incenting clicks. Or worse, they’re not optimized at all. The site itself most likely does not have much of a conversion focus. Still, traffic and conversion that already exists count towards the overall CPA. Factor in existing SEO traffic. For perspective on organic impressions, Google Webmaster Tools reports that aimClear Blog had 300K organic impressions from June 29 to July 29 with approximately a 1.8% CTR site-wide. The projections below are for an established industrial site with many more pages and a much lower CTR.
Add It All Up! The Average CPA, Paid & Existing Organic
Add it all up for a look at the overall CPA and conversion volume. This assumes your team can execute AdWords search, Google Display Network, Facebook Ads, Microsoft AdCenter and LinkedIn Ads in-house… possibly a tall order.
Calculate Agency Fees
It’s rare to have a company, spending only a half million a year on paid advertising, that has the kind of expertise to accomplish the numbers put forward in these projections. Let’s be real and add in $10K a month in agency fees, a relatively low price for that much paid-channel work at least in the first six months. The agency fee, in this scenario, increases the CPA by about 17.5% from $23.85 to $28.90. It always cracks me up when prospective clients try to negotiate down from our first-six-months price proposal for this much work. Each $1K of agency fees only effects the overall CPA by approximately 2%… hardly enough to squabble about if the agency can actually figure out how to achieve sales or generate leads on the Internet.
The SEO Effect
Now comes the fun part. Great organic CTR is (of course) dependent on well-written title tags and either well-crafted descriptions or, in this case, social buzz that recommends the content.
It’s not uncommon to achieve 15%-18% organic CTR for queries with an average rank in the top 2 positions and 1.8% CTR site-wide total across all organic impressions from any average rank. We’ve seen even higher CTRs, upon occasion, for longer tail searches.
Aside from classic and emergent SEO ranking factors, focus search engine optimization on optimized title tag writing for CTR and landing page conversion. Design those ads to earn qualified clicks and not just comma delimited SEO junk. We’ll also start a modest content program to attain traffic from even more mid and long tail keywords. There are many on-page methods to lift conversion, including standardized form locations, phone number placement, contextually relevant calls to action in the header, etc…
A good principle to keep in mind is that, in SEO, every page is a landing page. Treat every page in the site as such.
Let’s raise the agency fees to $12K a month over the first six months and dial in the improved performance bump. Over six months the additional $12,000 tacked onto our agency of record deal is fair. Assume that we are able to increase the traffic about 28.5% but pump CTR and conversion in a big way.
Against agency fees, the CPC for the additional 36K SEO monthly visitors is about $0.05 (5.5 cents?) and overall SEO CPA will now be $2.60. Of course, the reason the SEO work only costs $12K over six months is because it’s an add-on to the agency of record paid advertising deal. The SEO by itself would be higher standalone, but still a great value. Terrific! Now the average CPA is falling and conversion count rising. Still, we’re shy of that fantasy sub-$15 CPA and we don’t have enough conversion yet. Time for good old fashioned PR and social media!
Public Relations, News & Social Factors
Straight up: PR and social can pay richly. At the end of the day well-organized buzz matters a ton, financially. Like SEO, public relations and social media are far from free, but are a great value. That New York Times article or on-site content that goes incredibly hot on Facebook and Twitter can move the needle significantly.
It’s not uncommon for a major media mention, on-site viral event or mainstream article to drive 100K visitors in a month. In reality the traffic blast can be much higher. The visitors are often highly qualified, showing up on the site with conversion in mind. We’re projecting a relatively modest 2.8% conversion rate for the PR/social/buzz/news traffic. It could be higher.
Awesome! Increase the six month agency of record deal to $20K a month and factor in the additional conversions. There’s your 5K per month sub-$15 conversions, calculated after agency fees.
It should be no surprise that the cost of online advertising has risen to a point that it is no longer less expensive than legacy channels like television and mainstream print. The massive adoption of online since the mid-‘90s represented a shift of where consumers are reached, of epic proportions. These days, there are very few traffic “steals” out there in paid advertising land.
For that reason, attaining affordable and sustainable target CPAs requires organic conversions from SEO and PR. These clicks are not “free,” but even when factored in with agency costs associated with driving the conversion, still dilute the CPA of pay per click only marketing significantly. Happy hunting, marketers!
Marty Weintraub is author of Killer Facebook Ads (Wiley/Sybex 2011) and CEO of aimClear®, an online marketing agency that has managed Facebook ad campaigns generating over 10 billion impressions internationally.
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