Recently two research groups found that about 58% of all clicks for a search term are on one of the top 3 listings on the page. The top listing getting the majority of those. If you are in the tenth position on the first page, you end up with some where around 2%.
Logically every body should want to be in the top 3 right? Well, no.
It all depends on what it will cost you to be in one of those positions and then how many of those “clicks” will convert into a prospect or sale.
There are two numbers you must understand to make a good choice on Internet spending.
- Your gross margin on a sale
- Your conversion percentage
Most businesses start with an up side down view of the financials involved in A SEO or Pay per click program. The first question is often how many clicks can we get (Visits to a web site). If you get a ton on clicks, we assume that’s good.
Let’s look at this.
Let’s say your keyword has the potential to attract 1000 clicks if you are in the top position. It cost you $2500 a month to get there. ($2.50) a click. You convert 1 in 50 visitors to a prospect and 1 in 5 of those into a customer.
You just spent $625.00 in sales cost for each new customer.
If your Gross sale amount is $2000. and you have a 35% Gross Margin, you are about breaking even.
The place to start improving is in getting more qualified clicks, and having a better click to estimate or prospect rate. Turning 1 in 50 clicks to requests into 1 in 25 will immediately make this a profitable program. Or, turning a 20% closing percentage into a 35% closing percentage will do the same thing.
The best way to have a profitable marketing and sales campaign is to start with improving or insuring your click conversion (into a request for estimate, information, some action) is going to be good, and that when you talk to your new prospects your closing percentage is as high as possible.
And at times, when you do the math, you may just have to accept that your gross margins may not support a top 3 position cost, and you will want to investigate other lower cost forms of marketing.
The massive move of advertising dollars to the Internet has caused some types of Business marketing to become non viable for SEO and Pay per click. Make sure you work with a SEO and Marking firm that understands these numbers.