Click Through Rates – Value of SEO

There’s been lots of discussion, and bickering, over the last while about the value of SEO, how difficult / easy it is. There’s been two main groups squaring off. Some argued that SEO is easy. Design a good site, water it with a few links, and watch it grow (simplistic description). Others argued it’s hard, and complicated.

In a perfect world, if a site is well built with optimization in mind, the first argument might hold true. That’s in a perfect world. In the real world, that goes out the window pretty fast.

I’ve never yet seen a perfectly built site from an SEO perspective get launched. I’ve seen lots of really great ones, and some which came close, but let’s face it, compromises have to be made along the way. The SEO work that follows is, at the bare minimum, about turning those compromises into positives. Even when the compromises are few, perfection would only last until you add additional content, add a link, change something, or any search engine releases an algorithm update. The reality is, good organic optimization is hard work. Good optimization gets you traffic from all search engines, not just the one you bought ads from.

One of the problems for SEO’s and people judging their work has been around the concept of measuring value. It’s easy to value ROI on PPC. There are tools to measure that ROI.

In PPC you bid the the term(s) you want. You allocate a budget, say $10,000.00 / month for “your favorite term(s) here” and you can track your click throughs against your conversion rates, and determine an ROI against sales. Your budget runs out, you can easily make an educated decision on whether or not to spend more.

In a competitive category, clicks can easily cost $5.00 – $10,00 each. Let’s look at $5.00 clicks. The category is competitive because a lot of people are searching for the keywords / key phrase. At $5.00 / click, that means you’ll only get 2,000 click throughs from PPC. That’s still a lot. But if I look at some of our busier users, they get more than 2,000 clickthroughs per day on top terms.

Therein lies an issue which rarely gets discussed properly. It’s easy to calculate the ROI of a PPC campaign, because you know the budget. You know the number of clicks for the exact terms you purchased and you know the sales. Determining the right list of of terms in a PPC campaign takes a lot of work and analysis. Firms which are good at PPC work hard, and provide good value to their clients. Calculating the ROI on a PPC campaign though is pretty straightforward.

Calculating ROI in the same way is not so easy with SEO. It’s much harder to track SEO success, because of all the myriad of terms which users type into the engines looking for the same things. When you engage an SEO campaign, you’re getting a lot more than traffic to a defined list of terms. Many SEO’s use a list of terms as a starting point. That’s smart. They work on a lot more than those terms, as SEO is not just about the terms, but also the coding, structure, and overall content of the webpages within the site (not to mention links or anything else in a campaign). That’s the target of every SEO – to get your site ranking well for terms relevant to your business.

How do you calculate ROI on the results, which are designed to bring in traffic from not just the target list of terms, but also works on crafting better content on your site? The challenge is, the ROI on SEO is not as easy to calculate as the ROI on clickthroughs from PPC. To me, it’s apples and oranges, they are quite different, the overlap being they are both online customer acquisition strategies which work, and deliver value. They really are complimentary.

So, in lieu of a hard and fast number, I’m sharing a bit of data which provides an interim alternative. I looked at sites in our database which use SEO and PPC, and found that on average they run 80% / 20% organic to PPC referrals. 98.51% of all PPC referrals came from page 1. So, if they showed up in the organic listings on page 1 for the same terms as they were bidding on, they ought to receive, on average, 4 organic clickthroughs for each PPC one.

I ran a global analysis report on our database and, for simplicity’s sake, decided to normalize the numbers so that we’re using a table where if a website received 1,000,000 referrals from Google, the rest of the engines would send X. First off, these numbers are global. I didn’t filter based on territory or industry, or time of day / day of week. Clickthrough rates do vary depending on the industry your business is in, the country, and the language.

I’ve normalized the data, so that the volumes are easy to understand. If you get 1,000,000 referrals from Google, here’s how many would (on average) come from page 1, 2, 3,.. 10. Look across the rows at the volume numbers in the columns. If you get 1,000,000 search referrals from Google, we would expect that on average, you should see 174,272 from Yahoo. You can look down the columns and cross reference the projected volumes from a page 3 referral from Google against a page 3 referral from MSN and Yahoo. I’ve provided information for the top 5 pages herein. There will, of course be variances from one site to the next. These may or may not look like referrals to your site, especially if you get lots of image or video traffic. However, if you’re not using Enquisite, you won’t know what this looks like for your site. (hint?)

Why is this important to an SEO? Well, if you have a client who is performing well in Yahoo, and they get 500 referrals / month for a term that’s on page 2, you can now estimate what sort of traffic page 1 should drive, and what sort of traffic you should target from Google and MSN. How does this help? Now you have a better idea what to pay / charge for an SEO campaign for that unique site. If they are happy to spend $5.00 / click on PPC, what should they be spending on SEO? If a page 1 placement in PPC brings 1 visitor for every 4 from organic, what’s that really worth?

I suspect a lot of SEO’s will be quite happy. They can use this model to start properly valuing their services. It’s easy to find out what a PPC click through will cost; it’s easy to get a page 1 listing in PPC. It’s a lot more work to get to page 1 in the organic listings, and organic volumes for the same terms are higher. What should that value be?

Of course, the other side to this question, is which type of referral converts more often, the organic or the PPC referral? Sign up, and be among the first to find out.

Value of SEO

Let me put these numbers in the table in perspective. If you are getting considering an SEO campaign and receive 1,000 visitors a month click traffic from a term on page 5 in Yahoo, you should expect ~8,500 visitors from Google for similar placement. (if you don’t know what page you’re being found on, you really need to use Enquisite on your site). Now what difference will it make to your business if your placement improves to page 2? Using this table, you can start planning and forecasting.

So what’s the value of an SEO campaign which gains your site visibility under a plethora of relevant terms?

There are lots of points and perspectives which could be added to the discussion. A PPC campaign can be tightly fixed, budgeted and operate for a specific timeframe. SEO takes longer to kick in, but lasts longer (if maintained properly); PPC is more scientific, tightly focused, it’s like hunting with a laser. SEO is like hunting with a sawed off shotgun; etc…

The point is, they are both incredibly valuable. To dismiss either one as being anything less is absurd. If in excess of 80% of search referrals come from organic search, how can it be any less valued than PPC?

Out of interest, here’s the PPC click through rate averages. If you’re not on page 1 or 2, you’re nowhere. Strangely the rates don’t vary much from Google to Yahoo to MSN, in spite of the differences in the ways that ads are displayed.


PPC click through rates

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