Understanding ROI Metrics In Outsourced Search Engine Marketing

Outsourced search engine marketing services provide amazingly great benefits. But if you don’t understand the ROI metrics prior to outsourcing, you could end up gambling away some real scarce resources – your time and money.

For ecommerce online stores, tracking ROI from search engine marketing is a whole lot easier. The online order, checkout and payment systems present digestible data points.

However, when you come into B2B lead generation contexts, the story is different.

The complexity of multiple touch points involved poses a great challenge to low experienced digital marketers, traditional marketers and business owners. And from my experience, this is happening across different industry verticals.

NOTE – this post is about 3,036 words long. Consider the usability option below.

After auditing over 2000 adwords accounts, the CEO of Disruptive Advertising found that close to 75% of advertisers do not have conversion tracking set up in place.

Without further analysis, I bet that majority of these people are business owners and traditional medium marketers.

And they are all doing the ads themselves to avoid hiring paid search engine marketing consultant, agency or full time staff.

He also stated:

‘’While most companies struggle to make adwords profitable, majority of these people can succeed by fixing few common mistakes. Whether it’s setting up a small tracking programs, eliminating useless keywords, creating effective landing page strategy or giving the ads the attention It deserves, these problems can be overcome with little extra effort.’’ – Jacob Baadsgaard

It was only in the fifth month that Darren Holmes, an event services expert became aware of how conversion tracking works.

Prior to our first 30 minutes Skype call he assumed everything was perfect because he gets more than he pays for his monthly pay per click search advertising campaigns.

So in that frame of mind, he was driving all traffic to his home page. Now imagine if he was to start outsourcing with those assumptions he had then.

In this context, conversion tracking seems pretty much basic to a whole lot of people.

But defining what a conversion is and understanding the ROI metrics makes the whole picture a little more complex for many different people.

Asked what kind of performance report she gets for her outsourced search engine marketing, Anne responded ‘targeted traffic volume’. Probably, that was what she wanted and asked for from the SEM agency she hired.

Like many other small and medium sized recruitment agency owners, Anne Forrst thought that higher website traffic volume would solve all of her problems.

But at the end the seventh month, she was barely breaking even. The same reality applied to all outsourced digital marketing services.

In most cases, it’s either you are driving useless traffic to your website, have a poor performing conversion funnel or both.

But how would you identify the problem if it is you? Yes, I mean you, reading my post right now.

Before proceeding to ROI metrics, let’s take a little time to look at some of the key fundamentals. Sure you could pick one or two useful hints from there.

Why Search Engine Marketing

outsourced search engine marketing

Assuming you are one of the people still at the consideration stage currently, a question in this line may be popping in and out of your mind – why search engine marketing? Well, among many others, you’ll experience the benefits of purchase intent matching, immediacy and measurability.

Unlike many traditional marketing channels, you’ll have the opportunity to measure and report the outcome of every $1 spent.

And most importantly, it is performance based. You don’t pay until you get real prospects coming to your website, visiting offline operating location or even calling your phone. Check this post to see how pay per call advertising works. 

Forms of Search Engine Marketing: Google Adwords

With this option, you’ll be paying money directly to Google for each click or prospect delivered to your website. That’s why it is often referred to as being performance based or PPC. Call it paid search if you like.

While there are many other search engines that runs PPC advertising, Google adworsd is the market leader across the world.

Currently, Google owns 77.8% of global paid search ad market.

Forms of Search Engine Marketing: SEO

In the context of digital marketing, SEO stand for search engine optimization. It is a process of making the contents of your website eligible for higher ranking within search engine result pages.

That is when someone searches for specific keywords or phrases, a page from your website will show up with clickable link.

Unlike adwords, you don’t have to pay money directly to search engines for higher ranking.

One of the key benefits of SEO is that it almost seems like free traffic when the contents of your pages are optimized to rank higher for high value keywords.

For example, i did a search for the keywords ‘wedding planning lead generation’, and found this 2016 content ranking in the first page of Google.

wedding planning lead generation ideas

The implication is that a piece of content ranking in the first page could be providing quality traffic and leads for a multiple number of months and years. And in some cases, your website don’t even need to be on the first page to get good amount of organic search engine traffic.

Outsourced Search Engine Marketing: The Core ROI Metrics

In their State of Inbound report 2017, the team at Hubspot found that one of the major challenges many still face is that the leads delivered by marketing people to sales often don’t convert as much as expected.

And this means real disappointment for almost everyone in the value chain – the business owners, executives, marketing managers and agencies.

But that is mainly for people that have the resources to employ full time marketing and sales team.

Thus, if the conversion rate is perpetually low, the ROI will also be affected in the downward side.

The question is; where are you currently generating majority of your leads from? Remember, doing the same thing over and over again will give you the same results you’ve always had.

Website Traffic Volume

Practically, marketing means just two things to almost everyone in the business world.

Especially if you are business owner or have a role in marketing, the way you see It is the way you’ll do it.

First is like gambling. Yes, people who make 99% of their marketing decisions based on assumptions see marketing as gambling. Guess you know what the concept of luck is all about.

So whether you intend to outsource search engine optimization or PPC advertising, without data based ROI plan, you are pretty much gambling.

The second perspective is investment. On a relatively advanced level, marketing expenditure is supposed to be an investment.

This holds practically true when it comes to content based search engine marketing.

When you spend money to create and rank quality contents for high value buyer search terms, the ROI compounds over time.

Below are some of the important website traffic related variables you should consider before outsourcing.

Traffic Volume: Without targeted website visitors, you won’t have anyone to convert into leads or paying customers. On the other hand, without conversions the website traffic generated from your outsourced search marketing remains useless.

Thus, this is the core variable that you can be measuring from time to time.

And then find ways of improvement with whoever you hire.

If you are a business owner and you have no idea of your website traffic volume, that website you spent real money to build could as well be practically useless.

Website Traffic Sources: How does website traffic source relate to ROI metrics you may ask?

lead generation

Well, all traffic sources are not created equal.

And if the person responsible for marketing in your business doesn’t care about sources he won’t know which sources that delivers better conversion than the other.

With SEO traffic for instance, Google search console integration will give you insight on the keywords that brings the most valuable visitors from search engines to your website.

The insights derived from the top ranking pages and search queries will then provide opportunity for consistent improvement in all of the performance metrics that matters most t you.

Interestingly, without measurement, you can’t improve it.

Website Visitor Location: Obviously, people whose products and services can be bought and sold online shouldn’t be concerned about location.

However, for most offline service based businesses location of the people that visits your website makes a whole lot of difference.

Whether you are aware of it or not, people that visit offline business websites often consider location proximity. And it happens mostly while considering some product and services for purchase.

See this data from Google on how localized mobile searches leads to offline visits within 24 hours.

Among many other things, visitors from non branded search terms are never within your control.

Practically; with an active local search engine optimization strategies you can begin to increase the number of qualified and interested prospect visiting your site from preferred target locations.

For example, imagine how local SEO will work for a wedding planning or event space rental business serving one state in a country. Hint: a lot of your competitors still don’t know how local SEO works.

Conversion Metrics

website conversion rate

I know that growing website traffic volume is good. You also know. We all do. But at the long run, real conversion is better. It doesn’t matter what valuable conversion means in your own business or company.

Before outsourcing search engine marketing, you have to understand the peculiar conversion metrics that are most valuable in your business.

In this day and age, buying SEO services without conversion tracking is really dumb.

Here is one reason why you may consider a full service digital marketing agency as opposed to niche experts. Among other things, you get the benefits of centralized performance tracking.

You’ll be able to see the outcome of your marketing budget spend on each channel – paid search, SEO, social, email etc.

Unfortunately, without conversion you have no basis to calculate ROI. Also without conversion, proving marketing ROI won’t be possible.

This is the biggest challenge I see among people learning how to outsource search engine optimization for the first time.

Now let’s look at the major conversion metrics.

Total Sales: Starting with the end in mind within this context implies that both your website and search engine marketing strategy should be aimed at generating revenue. But without targeted website traffic and real sales, you could be gambling some resources away.

For most ecommerce and online businesses, tracking sales conversion is relatively easy.

And because of this, calculating the contribution of search marketing (Adwords and SEO) to bottom line ROI doesn’t require high level expertise.

Simple ecommerce conversion tracking in Google analytics could just be enough.

But when it comes to offline businesses with multiple touch points and longer sales cycle, the story is different.

The complexity is more than what an average in house digital marketing expert can handle. Maybe you are still struggling with an overworked in house generalist.

On the other hand, you could be the person in charge of marketing with intimidating workload, limited budget and timeline.

Finally, without sales you won’t be able to tell if you are breaking even or losing money.

In the worst case scenario, you may be the one wasting good amount of time on vanity social media metrics that brings zero results.

Quality Leads: Even with common sense, you should be able to tell how the quality of leads affects both conversion rate and ROI on marketing budget.

Especially in the context of organic search engine optimization, many people still don’t track leads, including inbound marketing agencies. The question I hear most often goes like, if all our sales happen offline how do we attribute that to a particular lead source?

While full scale analytics is beyond the scope of this post. Below are some options you should consider.

Use Google analytics conversion funnel tracking. Attach a dollar value to every single lead generated from your search engine traffic.

Leverage on inbound call tracking software to get data on leads and sales closed over the phone.

With call analytics platforms like CallRail or Invoca, you could be getting reports deep down to the keywords delivering leads and sales from your outsourced search engine marketing campaigns.

But don’t stop at traffic and leads. Because at the end, high volume leads doesn’t equal high volume sales.

Cost Per Acquisition: Regardless of whether you are operating from ecommerce or lead generation context, cost per acquisition impacts almost everything else. And for the purpose of this post, CPA can be viewed in two different perspectives.

The one you choose will depend on your role and goals.

First is the cost per lead.

If your role and responsibilities is centered on lead generation, you should think through CPL very well in order to plan for profitable campaign.

The question is; how many website visitors do we need to generate a single lead?

If you don’t have historical data to work with, here is an option for you. Assume 1% conversion rate on your website traffic. Specify the potential revenue per sale.

And then set 2 – 10% of potential revenue per sale for lead generation. With $1000 as potential revenue, $100 (10%) becomes the amount you need to spend to generate a single lead out of every 100 prospects.

In this scenario, how many $100s will you spend to generate the volume of quality leads you need? Will you focus on SEO, Google adwords or both?

The second option is looking at cost per acquisition as customer acquisition cost.

How many leads will it take to get a single paying customer, not a lead?

So if you stop at lead generation metrics, you’ll be seeing only half of the marketing performance picture.

Let’s say you are working for a recruitment consulting agency. Attach $20 to 100 leads.

Based on your average billing per transaction, how much would 1% conversion worth in your business or company? This will enable you determine how much it will cost to get a single paying client.

Improved understanding of customer acquisition cost (CAC) will also enable you allocate your marketing budget to the best sources of quality leads.

‘Earning revenue is good. But if 99% of that goes to customer acquisition, then you are trapped in a vicious cycle.’ – David Skok

Conversion Rate: This is simply the percentage of your website traffic converting into leads or paying customers. On the other hand, it could also mean the percentage of your leads converting into customers, not just website traffic.

In practical terms, if your conversion rate is very low, possibly under 1%, this will be impacting the ROI on your search engine marketing budget or other channels in use.

In general settings, quality of website traffic, quality of leads, value or lead magnet and conversion funnel; all impacts conversion rate.

Among many variables, source of traffic and leads makes the highest impact. Get enough wrong leads in your pipeline and you’ll become helplessly busy at wasting time.

Core ROI Metrics

Except in rare social enterprise settings, the ultimate motive behind every business is profit making. And we all know that without active marketing, profit making goals can hardly be accomplished.

I guess this is why people seek outsourced search engine marketing services in the first place. For most people, hiring a full time in house digital marketing expert isn’t affordable.

The above stated fact simply implies that without profit you either don’t have a business or you are just busy with a hobby.

The same fact applies to outsourced search engine advertising as well. Google adwords for instance is supposed to bring back more than what you put out.

With a well thought out SEO strategy, you should take this into account from day one. Below are the core metrics that defines marketing ROI in many different industries and niche markets.

Understanding them will help you start with the most valuable end in mind as opposed to taking whatever that is offered.

Return On Ad Spend: Especially in paid search advertising, this is the real measure of how effective and profitable your campaign is.

Unlike organic search engine optimization that takes an unpredictable duration before deciding whether it’s profitable or not, you can see your ROAS in a very short time.

For example, if you spend $1000 and got $5000 back, your return on ad spend will be revenue divided by cost. In this case it will result in 500% return or 5:1, meaning that you get $5 for every $1 spend.

Profit Margin: The entire world of capitalism is centered on this one.

In practical terms, if you are not breaking even, then what you are doing as a business may not be much different from pure gambling.

Consequently, any search engine marketing agency you want to hire but doesn’t take profitability is often interested in their earnings and nothing else. The fact is that if you are acquiring each customer at a cost of $200 but earns only $203 from each, you’ll need higher volume to stay in business.

But the underlying fact could be that your current customer acquisition channels and strategies need either full replacement or improvement.

Among other things, profit margin determines how long you’ll stay in business and the financial growth potential.

Constant inflow of external funding won’t even save the situation if you are not breaking even.

Customer Life Time Value: In comparison to customer acquisition cost, the question is how much would you earn from a single customer over the period of your relationship with a person or company?

This metric isn’t relevant to all businesses, but it affects bottom line ROI.

Thinking through this one helps to decide how much is acceptably ideal for acquiring a single customer.

So a high customer life time value warrants higher cost. Putting this into consideration will determine how aggressive you should or shouldn’t be in relation to the competition in your niche.

Conclusion

For those still paying for visibility alone within traditional mediums like newspaper, flyers, posters, and billboard, now you have a better understanding of how search engine marketing works.

With the insight provided here, you’ll be able to go beyond surface level guesswork with regard to ROI on your current marketing practices.

And if you have made up your mind about outsourced search engine marketing services, don’t stop at website traffic only.

Without conversions, your website traffic is useless. Perhaps, things could get really worse than as it is now if you continue spending money to attract wrong visitors.

The big question is; how many of your leads are actually converting into paying customers?

On the first instance, this has a lot to do with the quality of your website traffic. Low quality traffic makes for lower conversion rate and vice versa.

While driving traffic with paid search advertising and SEO is relatively possible for many inbound marketing agencies, not all of them tracks conversions.

The few people that do it stop at conversions only.

[thrive_lead_lock id=’344′]Hidden Content[/thrive_lead_lock]

However with Call tracking integration, you’ll be able to get a proof of which channel delivers more inbound phone calls and sales than others.

Check this SEO case study on how we helped a Colorado, USA company grow their organic search traffic by 1,697% in 10 months.

You can as well join our Facebook group – The Search Tribe to discuss, discover and leverage working strategies to attract only the people in need of your products/services – Now.

 

Published by

Donald Felix

Google certified digital marketing consultant specializing in search engine optimization and paid search advertising. We leverage on powerful tools, influential contents and data analytics to engage potential customers exactly when they are searching for your products/services. Also a serial internet entrepreneur, avid reader and father of 3.