Is Search Engine Marketing Effective?

Yesterday one of my MBA students asked me if Search Engine Marketing (SEM) was absolutely needed to market a company on the web.  This is a tricky question because I am not an SEM expert, but I do have some personal experience when it comes to marketing my own brand online.   I didn’t however want to lead my student down the wrong path based on my experience so I made sure that he and the rest of the class knew that I was not an expert in this field and this is simply based on my own personal experience.

Is SEM necessary? I don’t think it always is, and let me give you a little insight based on my experiences; over the past several years I have used both Google and Yahoo (more recently Google) to market services and products.  As recently as earlier this year I have used SEM to market my company Throttle Media’s data services on Google and for those of you who don’t know how this works, I will give you a brief explanation.  You pick a keyword, let’s say that you are selling jewelry and you want to use the keyword “necklaces”, according to Google Adwords, the average Cost Per Click (CPC) for that word is around $1.83, every time someone goes to Google and types in the word necklaces, your site would come up as the first choice and everyone who clicked on that link to go to your page you would be billed $1.83.  Now the tricky part is staying in first place, because if another company wants to be in first and starts bidding higher than the cost of that keyword will keep going up and the more popular a keyword is and the more companies bidding on it, the higher the CPC.

Let me give you a real experience, my company sells data and leads, and we were using Google to generate traffic to landing pages where those prospects would fill out a form about the particular data or lead they were interested in.  The average cost for the word “Lead” was over $8 a click for us to be in the number one spot, the number two and three spot was slightly less, and of course each time we tried to be number one the company that was previously in that spot, that we knocked down to the number two spot started bidding against us because of course they also want to be in the number one spot, driving the cost up even higher.   Today if I wanted to select the same keyword “leads” the cost is $10.53 for the number one spot and that would undoubtedly go up once the bidding started.

I took a list of about 15 keywords that pertains to our business and that Google showed had daily usage each day and I gave myself a $6000 monthly budget which is $200 a day and Google estimated that I would have between 37 to 55 clicks per day with an average CPC being between $2.12 and $5.41.  Our minimum list is $300 so if we averaged one sale per day  based on this traffic we would have an ROI of $3000 at the end of the month.  Unfortunately it’s not quite that easy because in my personal experience with these very same keywords, half of the clicks to the site were what I call “Looky Loos”  they aren’t there to really purchase, they are just curious, they never filled the contact form out, so that brings us down to 18-27 clicks per day and out of those we get a lot of small mom and pop companies that cannot afford to spend $300 and there are those that were “just curious” or “I was just wondering what the cost would be” or “what could I get for $100”.  Don’t get me wrong we would get the occasional order from an actual business, but overall we spent more money that we made.

I have spoken to many companies  that have had similar experiences and are not too thrilled with using Search engine Marketing and have either turned to other ways  of marketing or are considering doing so in the near future.  Many are turning to Social Media to market their brand which is what my company has done in a limited capacity and we have already seen an increase in business, as of yesterday a 20% increase versus last year this time. According to Tech Zoom In Social Media Marketing (SMM) is getting more exposure than SEM which is losing ground quickly as networks like FaceBook and Twitter are becoming increasingly more popular and it is more effective, cheaper, and easier to use and implement.

Only time will tell where all this ends, because the Internet is still young and is going through growing pains and is constantly evolving and as the web develops it will be interesting to see what it looks like when it is all grown up.

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About Joe Melle

Joe Melle has founded and ran several successful businesses, and has had an interesting career in direct contact media, call center operations, sales operations, customer service operations, customer retention, and quality assurance; he has written over 140 business articles, previously served as a part time adjunct professor for a university teaching business, marketing, and management courses to both graduate and post graduate students.Email Me