How much money should I spend on SEM?

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Click Play to Listen to Podcast Now[podcast]http://ewebstyle.podomatic.com/enclosure/2010-08-22T21_32_47-07_00.mp3[/podcast] Pay Per Click versus SEO

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Sixty-seventh Internet Marketing Podcast July 2nd 2010.  Third page of Transcription

How much money should I spend on SEM?

Chris: — ’cause I have to. [Laughter] No, he really is. He’s a nice guy. He’s a smart guy. He’s a sales guy focused on selling and they sell security systems for businesses and also the plumbing work for fire systems.

Paul: Okay.

Chris: The net is not what he does and he just didn’t know. And I tell you, the fact that we had somebody in this office who didn’t know means there are a buttload of people —

Paul: Yes.

Chris: — out there. Not butt flap like in the video.

Chris and
Paul: A buttload.

Paul: Which kind of sounds like dooky.

Chris and
Paul: [Laughter]

Paul: That’s all I can think of.

Chris: I think the other term is shitpod.

Paul: Yeah. [Laughter]

Chris: I don’t know if we can say that on the internet. [Laughter]

Paul: I like that term. Okay.

Chris: Anyway, so there’s a whole lot of people who don’t realize that difference. So they may just be unconsciously going directly to the right side. So there’s a potential client that if you’re saying, “You know what, were organic. Let’s cancel pay-per-click.” You’re missing him. You’ll never get that client if that’s where they happen to go.

Paul: And I would never recommend someone do that. And listen, from my own personal standpoint, I do not click sponsored ads.

Chris: Most of the people we talk to say that.

Paul: Rarely, if ever, and at first, two years ago I’m just pushing SEO and SEO and I’m like, ah, PPC, whatever, you know. I don’t click them. Personally, I don’t click them, but the numbers speak for themselves.

Chris: Billions.

Paul: They speak for themselves.

Chris: Billions of dollars. Google makes their billions of dollars from the pay-per-click.

Paul: There you go. People click on those things. Now, just because you don’t, it doesn’t mean other people won’t. So take that into account. Think like a customer. Don’t think like a business owner. Don’t think like what do you do.

Chris: Yeah, don’t think about yourself.

Paul: Yeah, think about what the other people do. So they’re both great ways to market. The second thing to take into consideration is the cost upfront and over time of SEO versus pay-per-click. Okay, with search engine optimization, everyone — I mean I’m not — I don’t know think we — I guess — I don’t know if we have covered this but typically with search engine optimization, there’s a lot of work that has to be done upfront. We talk about this. Before you even optimize you got to have meta tags, right content, keywords.

Chris: The effort involving keywords is ginormous.

Paul: Research, you know, you’re going to have a heavy upfront cost, and it could be a set-up fee or it could be this or that, and then you’re going to have a monthly cost to maintain those efforts. Companies like us they’re going to charge you for that ’cause it’s going to take their time, a week, two weeks possibly a month —

Chris: Upfront.

Paul: — just to set your website up and they’re going to bill you for that. Small and medium size business may not have the budget to take care of that —

Chris: Take care of that expense.

Paul: — but it’s — and if anyone is saying they’re going to do your SEO without setting up your website, red flag, run away.

Chris: Yup.

Paul: We have never seen a website that —

Chris: That was ready to go.

Paul: Thank you.

Chris: Ever. Yeah.

Paul: PPC or —

Chris: Unless we made it knowing it was going to go towards —

Paul: It was going to get up — yes, you know, you got to look at calls to action. And someone should be telling you this. “Hey, yeah, I will optimize your website but you have no calls to action. Your phone number is not on your website. You don’t have any keywords on there.”

Chris: What do we call it? We call that something.

Paul: Being a douchebag?

Chris and
Paul: [Laughter]

Chris: No, that was three podcasts ago. SEVO.

Paul: SEVO. That’s right.

Chris: SEVO, search engine visitor optimization. So it’s a conclusion especially with pay-per-click and with organic. Once we get you up there you’re going to get traffic. The question is what is your website going to do with those traffic? What is your search engine visitor optimization? So if people — if the SEO and/or pay-per-click company that you’re working with is not asking those kinds of questions, you know, what’s so a great — in fact, we were discussing the other day about how much value we have to give once we know that we’re getting them traffic, like we got to double check the website, we got to say, “Okay, when I type these keywords where are they showing up?” And with us that’s a six-month review. Hey, you know, these terms are getting you lots of traffic. They’re sending you to a page that doesn’t really have those keywords in it for whatever reason or those keywords are well placed in it they’re just not prominent enough to really grab attention. So that ongoing process you need to look for your SEO company to do.

Paul: Yes, and now in terms of the long-term cost with SEO your long-term cost, your monthly maintenance is not going to be nearly as much as what it — your upfront cost was ’cause it’s not — you know, preparing the website takes much longer than actually maintaining it. And with pay-per-click, your cost stays pretty stagnant. Well, if you don’t — adding a new keyword and things don’t change —

Chris: Or new markets, yeah.

Paul: Yeah, or new markets, if you keep things constant it should stay pretty much the same. So when you’re sitting down thinking, okay, what’s my budget everyone should be thinking, what’s my budget for internet marketing? Okay, I want to do PPC and SEO. I need to have some money upfront to prepare my website. I need to have money to maintain my SEO while I’m ramping up in the rankings and I need to put money into my pay-per-click so I can make business today, tomorrow until I get on the front page first position. So that’s the cost over short-term and long-term. The last thing I want to talk about are the results, the long-term value of pay-per-click versus search engine optimization. Again, I’m going say that the value results of pay-per-click will are, for the most part, stagnant. Well, I want to say they should go up, they should be linear, okay, because the longer you’re doing pay-per-click, the more that you’re learning, you’re figuring out that keyword sucks, this keyword is better —

Chris: Actually, where money at.

Paul: Yeah, so it should be linear. Now, I wouldn’t only say stagnant. It should be linear. It should get — the more — yeah.

Chris: And if you’re doing AB variant and — we haven’t done a podcast on that. That would be a great podcast to do. Well, you’re actually having — okay, so we decided that a call to action is a phone number and another call to action is to download a white paper where they give us an e-mail, a name, and a phone number, and they press “submit,” and they get that white paper. We can have one page that focuses on the phone number, another page that focuses on that form, and we can determine which one — first off, which one gives us more calls and which one gives us more action submittals, and then with our system set up properly we can actually track, oh, great I got a lot more calls but I close a lot more business when they submit forms. So maybe I’m getting less forms but the ROI of those submittals —

Paul: Is higher.

Chris: — is higher. So you can really, with this whole process, break things way down and really understand where the value is.

Paul: So with your pay-per-click, you should have a linear slope. It should — you know, the more — if you put more money at it and the better, you get at it you should have better result. If you’re spending — I mean here’s an example. You spend $100 a month — I mean, of course, this is depending on your industry.

Chris: You mean a day, right?

Paul: Yeah.

Chris: [Laughter]

Paul: So if you spend $100 a month, you’re not going to get that many results from.

Chris: $100 a month is throwing money at the wall and hoping that something sticks. And frankly, usually when you throw money at the wall — I’ve tried it — nothing sticks. It just — nothing does.

Paul: Yeah. If you spend $1000 a month, okay, now we’re talking, you spend $10,000 a month, your results are going to increase with your spend and hopefully you’re learning so maybe you can get a little bit more of an advantage ’cause you’re getting better, your keyword selection and things of that nature. With search engine optimization, the value of your results should be exponential. And if you took out high school algebra you understand the exponential curve, you know, the better — because okay, the difference being on the fifth page of the natural results and being on the fourth page is huge and being on fourth to third is bigger, you know —

Chris: The number, of course, we could potentially get. Yeah.

Paul: — third to first is massive and being from the 10th position to the first position is just exponential.

Chris: It’s insane, yeah.

Paul: It gets bigger and bigger and better and better and better. So that’s what you should take into account. Over the long run, your SEO it’s going to cost and I think that that’s one thing that people don’t necessarily think about. I want to be on the first page of Google, you know. Whether it’s PPC or SEO, it’s going to cost. Your placement on the PPC is tied to your bid. It’s tied to a lot of things but it is tied to your bid so when you’re doing your budget you need to think about that what is — I need a budget for this. I need to have this upfront money for SEO, upfront money for PPC but it’s all going to work.

Chris: I think it mentions some good things in for a lot of the business owners out there. It’s pretty important and the guideline that a lot of business is used is a percentage of revenue should go towards advertising. It doesn’t necessarily need to go all towards us as an internet marketing —

Paul: Yet.

Chris: — yet, but it certainly could at some percentage of it. So it’s a good idea to pull a number. And I know there’s a very famous businessman here in town. He sells like $45 million worth of furniture and his number is 15%. 15% of his revenue, gross revenue, so that’s before expenses and everything, goes back into advertising. Choose a number so that you know where you’re at ’cause Paul just said a number. He said $10,000 spent on pay-per-click. That probably makes a lot of people nervous.

Paul: Yeah.

Chris: A better way to look at that $10,000 is what is my revenue have to be if I’ve allocated — let’s just use the same number — 15% in order for me to be spending $10,000 of that money on internet marketing specifically pay-per-click? Think in those terms because you don’t have to start spending $10,000. You need to start spending more than $100 ’cause that’s throwing money at the wall and it’s not going to stick. So your target for pay-per-click is usually we’re around a minimum of $600 to $1000, and then what are the things that you need to put in place so that your business grows so that you can spend. In fact, not that you can, that you should be spending $10,000 a month because at that point with the 15% number, I wish it was 10% ’cause it would be easier —

Paul: Yeah.

Chris: If it were 10% that means it’s a $100,000 a month of revenue. You’re spending 10% on internet marketing.

Paul: $10,000, yes.

Chris: So think of it in those terms ’cause these numbers are — all of our proposals now actually we start off with recommendations and all of our recommendations tend to push business’ comfort zone, and that’s okay because what we’re telling them is here’s what you should be spending ultimately when your business has matured and has taken full advantage of the internet market that’s available, right? When you get there your revenue is going to be here. We don’t want that check today, right, so that we can spend it on pay-per-click, but we want to get it so that you’re comfortable cutting that check because it’s giving you so much value.

Paul: Yeah, and you’re going to have to get comfortable unless you’re doing it yourself. It’s going to cost. You’re going to have to be able and willing to invest your time and money into your business to assure the future of your business. And one last point before I get out of here, there’s something that I think is phenomenal and I believe that — now that I’m more educated, now I believe that pay-per-click and search engine optimization are complementary services. They can help each other. They help with your branding and they can help — you become more — each can help you become more successful. A great technique is that if you’re doing pay-per-click, since you get results faster, you can use your keyword research for you pay-per-click to help with your search engine optimization because with SEO if you select a keyword number one it may be a month, two months before you figure out oh, hey, does this keyword bring an ROI? Does it bring traffic?

Chris: Maybe it gets traffic and no ROI.

Paul: Yeah, it takes time to figure that out. With your pay-per-click, you know immediately. Okay. No, this keyword sucks. So they work together to help you and your company’s internet marketing campaigns. So keep that in mind. And there are more similarities to it. I had actually printed out a chart but it’s — we don’t time.

Chris: We don’t have time. So excellent. This is podcast number what? 67. You are listening to the most popular SEO podcast on iTunes. We really appreciate you listening, and we really appreciate it when people like Corey —

Paul: Hardcore.

Chris: Hardcore — iHardcore, there’s a little “i.” It’s kind of cool. iHardcore. Go out here, create an account on iTunes, submit a review, and then make sure you e-mail us ’cause we’d love to give some link love back to Corey. We really appreciate that. This is the end of podcast number 67. We really appreciate you listening. Until the next podcast. My name is Chris Burres.

Paul: And I’m Paul Hanson.

Chris: Bye-bye for now.

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