By being able to control the maximum cost-per-click for every keyword, this puts advertisers in a position where they are able to monitor the profitability of every keyword they are targeting.

Search engine ads are one of the most trackable marketing activities available, and if you’re running some sort of eCommerce environment then you have the potential to track the exact return on investment (ROI) each keyword is bringing.

However, this degree of reporting can lead to misinterpretation of what is a “good” keyword and what is a poor keyword.

At the basic level, a decent Analytics setup will allow you to determine that for every $1 you put into AdWords, you are getting $X back. Clever operators will have this set up for each individual keyword.

However, relying just on ROI can be a big mistake. Let’s take the following example.

Keyword #1 – “widgets brisbane”

• ROI = $4.50
• Monthly Spend = $300

Keyword #2 – “widgets sydney”

• ROI = $2.80
• Monthly Spend = $700

From the above example, we can see that “widgets brisbane” is a better performing keyword. Therefore, if you only had $1000 in total monthly budget, you would spend all of it on Brisbane (presuming of course there’s enough traffic to use that much). However, if your budgets are flexible and you can spend more if you want, then would you turn off the Sydney keyword?

The answer is no. ROI is just one factor you need to consider. The other is profit. The Brisbane keyword makes $1,050 profit per month (300 x 4.50 – 300) while the Sydney keyword makes $1,260 profit (700 x 2.8 – 700).

Turning off the Sydney keyword would make your business worse off. Obviously you should also consider the profit-margin on the actual widget itself when calculating these figures.

Now most people when faced with the above scenario, would obviously choose to leave both keywords turned on, but for some reason when this scenario is expanded to hundreds of keywords, rational profit-maximising thinking tends to go out the window.

Let’s say an AdWords’ advertiser is spending $1000 per month across hundreds of keywords, and is getting about $5000 back (a $5 ROI). Based on this good performance, the advertiser decides to increase their budget to $2000 per month, which in turn lifts the revenue to about $9000 (a $4.50 ROI).

Looking purely at the ROI figures would lead an advertiser to incorrectly assume the increase in budget has not worked, and they might drop it back. However, looking at the profit figure clearly shows monthly profit rising from $4000 to $7000.

One of the questions we are commonly asked is “why does my ROI drop when I increase my budget?”

The reason behind this is actually tied to the economic principle of the low-hanging-fruit. The low-hanging-fruit principle basically explains that in business, there are some sales that are easier to get than others, like the low hanging fruit on a fruit tree is easier to reach.

In an AdWords context, a low-hanging-fruit keyword would be something like “buy online widgets now.” If a user types this into Google, it’s likely that they already have their credit card out of their wallet and are ready to purchase. These longer, more specific keywords are also often cheaper to bid on than generic terms.

By contrast, a user searching “widgets” is not a low-hanging-fruit. This term is highly generic and it’s going to take a good salesperson (in this case a website) to convince this person that now is the right time to buy.

Essentially, this is why ROI drops when you increase your budget. The AdWords’ algorithm has a built in “low-hanging-fruit” factor that shows higher performing keywords more often, meaning when you increase your budget, you’re starting to reach for the fruit higher up on the tree.

The lesson here is that the way to assess how your AdWords’ campaigns are performing is to find the point (budget amount) where total profit is maximised, not where ROI is maximised. This simple mistake could be costing your business thousands in lost sales.

This statement may have some scratching their heads, but the similarities between a business’ website and their employees makes it more than achievable.

Let’s firstly look at initial costs. Most websites cost between $5,000-$30,000 to build, which, depending on your industry, is also around the amount it can cost to recruit and train new staff.

But once you’ve recruited a new staff member, the job’s not done. In order for that employee to become a valued team player you need to invest in training, resources and time, as well as pay them a yearly salary.

This goes for your website as well. Once it’s built, you need to invest in continually improving its effectiveness. This often includes both search engine optimisation (SEO) and search engine marketing (SEM) on an ongoing basis as the website’s salary, and ongoing usability improvements as their training.

Like an employee, websites also work best when there’s an ongoing buy-in from managers, spending time actually trying to improve the work that they’re doing, rather than being left alone to twiddle their thumbs and cost the business money.

The deal struck between Yahoo and Microsoft will see Microsoft’s Bing-powered organic search results displayed in Yahoo searches whilst Yahoo’s Search Marketing program will control paid results in Bing. In essence, what it will mean is that Yahoo and Bing will have the same search results.

In Australia, Microsoft’s AdCenter program is not available, as Yahoo and Microsoft already have a deal that allows paid search placements on Microsoft search networks (Bing, NineMSN, Live, etc) to be controlled using Yahoo’s Search Marketing system. This means that in Australia, the deal does not have as major ramifications to the search engine landscape as it does in other countries around the world.

In Australia, the only real change will be in Yahoo’s organic search results, which will now be powered by Bing.

To have an idea about the implications of the ACCC’s decision, it’s important to understand that in markets where there exists an oligopoly (only a small number of firms controlling a large portion of the market), the ACCC will often step in to oppose the big players merging or striking arrangements that could hamper competition.

However, in this case, the ACCC found that the deal would be unlikely to reduce competition because:

• Microsoft and Yahoo already have a deal in Australia with paid search ads. Currently, ads on Bing are already controlled through Yahoo’s Search Marketing program in Australia, meaning the new deal did not present as much of a change to the way Australians are presented with search results when compared with the rest of the world.
• Yahoo and Microsoft’s current market share was so insignificant when compared to Google’s, the deal is unlikely to result in any additional market power.
• The deal is unlikely to reduce innovation in the search engine industry.

The ACCC’s ruling, whilst a good result for Microsoft and Yahoo, is also a bit of a back-hander, because it essentially means the ACCC considers the multi-billion dollar companies of Microsoft and Yahoo small players in the industry, and not big enough to be able to obtain any market power.

But despite the deal, Google is unlikely to be worried. Microsoft has spent millions on advertising Bing worldwide, yet despite this, has failed to grab any significant market share from Google.

As for whether Yahoo and Microsoft are now in a position to take on Google, I doubt it. Google’s massive paid search “cash cow” is funding an innovation program others can only dream of. Wisely, both Yahoo and Bing have realised the only way they can stop Google is take their search engine market share, hence dampening their massive advertising revenues.

However, this is a classic case of easier said than done.

In the past there’s been a trend amongst many businesses to treat their online presence as a completely separate entity. However, as the Internet becomes more and more mainstream in terms of online buying, the need to make online customers feel comfortable with a brand is also growing in importance.

Online consumers expect to see a consistent brand image in order to be reassured that they are receiving the same level of service that offline customers are.

The Australian pizza industry is one market where there’s a range of approaches. Of the three major pizza chains in Australia, one provides a very slick online experience, allowing coupons to be added, pickup or delivery options specified and most importantly uniform pricing across all marketing channels. That is, the prices advertised in mailbox drops, TV commercials, coupons and online ads are all uniform.

This is a critical factor for an industry such as pizza, where traditionally phone orders have been the primary ordering method. Online ordering in an industry such as pizza doesn’t create a huge deal of cost savings over phone ordering, but it does give customers more convenience.

By contrast, one of their competitors has a scatter-gun approach to pricing and uniform marketing. Prices advertised on TV often can’t be ordered online, certain coupons are only able to used by phone and what a potential customer is faced with is a bizarre form of brand confusion whereby the same company is advertising across multiple mediums a completely different range of products.

However, this particular case is not unique. Countless businesses fall into the same trap of thinking there are two different types of customers; 1) ones that buy online, and 2) ones that don’t. The distinction is not so black and white anymore, and many customers will feel comfortable using both.

But this multi-channel shopper needs to see a certain degree of pricing and brand uniformity, or else they will likely switch to a competing provider.

Whereas once the Internet was seen as the realm of IT geeks, it is now common for marketing managers to be heavily involved in the planning and implementation of online marketing activities, even to the point of learning to speak the lingo.

However, one area of online advertising has always struggled to secure its share of the marketing mix; SEO.

SEO (Search Engine Optimisation) has often been classified by businesses as being stuck somewhere between a website maintenance item and a legitimate marketing activity. That was, up until now.

Over the last six months, Reload Media has conducted a SEO Survey for business, and the results make for interesting reading.

79% of Queensland businesses surveyed now see SEO as part of their marketing mix, and only 14% of Queensland businesses have never undertaken any SEO in the past, down from 37% at the same time last year.

About this time last year, around 16% of businesses had no idea how they were positioned in the search engines, with that figure reduced to just 11% in 2009.

So whilst it appears that SEO has now become a legitimate part of the marketing mix, there’s still a way to go before it gets its fair share of the marketing budget, although the recent global economic meltdown may have helped its cause.

The last few months has subsequently seen Yahoo and Microsoft enter into a new deal that will see Yahoo’s Search Marketing ads appear on Microsoft sites and Microsoft’s organic results (powered by Bing) appear in Yahoo searches. Once again, this deal will need to jump through the anti-trust hoops but if it does, it shapes as a real threat to Google’s seemingly invincible search monopoly. Having said that, for Australian users this doesn’t change all that much, as Yahoo! Search Marketing has been controlling paid ad placements on Microsoft sites for some time anyway.

After only a few short years, it appears that Microsoft’s Live search engine experiment has been put to rest and in it’s place has emerged Bing, which has launched a massive $100 million (plus) worldwide advertising campaign designed to capture some of Google’s 80-85% market share. The name Bing was supposedly chosen because it resembles the sound made when you discover what you’re looking for (the lightbulb moment), but more cynical users might more logically associate it with a Windows error message dialog.

I have a slightly different theory, as Microsoft no doubt realised they needed to come up with a name that could make its way into users’ vocabulary in much the same way that “Google it” has entered mainstream vernacular. The old name, Live, didn’t lend itself to being used as an verb, but with Bing, they do have that (faint) hope.

So what does this mean for the ‘Google v Microsoft’ battle? The early signs are that Bing is making some ground into the search engine market share, with figures reporting that Bing has captured between 5-8% of the total search audience since June 2009. This may not seem like much, but in a industry worth billions of dollars every year, this translates to a significant jump in advertising revenues. Being in the industry, I’ve also been asked quite a number of times about Bing, and in the 3 years that Live was in existence prior, I don’t remember it ever being mentioned by a client once.

There’s no doubt that Google still reigns supreme over both Microsoft’s various search incarnations and Yahoo but for the first time in quite a few years, it seems that both Yahoo and Microsoft have abandoned their “if you can’t beat them, join them” mentality when it came to Google and are now actually serious about taking on (or at the very least, making some inroads into) Google’s mantle as the undisputed king of search.

Bring on the next round…

For quite some time, the online payment world has been dominated by PayPal, as its raft of features and ease of use for almost anyone has made it a logical choice for most online businesses. That was, however, until Google Checkout came along.

Google has taken their typical approach of making the use of its system totally free and easy to use. For a start, Google takes a flat 2% of any sale through Google Checkout (plus a 20c transaction fee) making Google Checkout competitive, if not cheaper than PayPal for most users.

But that’s not where its big benefit is. Google also offers free transactions on the dollar value of up to ten times your Google AdWords spend. That means if you’re a business advertising on AdWords spending $1000 per month, the first $10,000 you make in the month is all yours (with no commission for Google).

Since most businesses that have a checkout system probably use AdWords anyway, this is a massive advantage to using Google Checkout over PayPal.

But that’s not where the benefits stop. AdWords advertisers are also able to use the ‘Google Checkout Badge’ underneath their ads in the search engines and Google claims this badge improves both click-through and conversion rates (the percentage of people who buy) quite substantially.

However, Google Checkout is not just a threat to PayPal, but also to a legion of web designers who charge thousands of dollars to build custom shopping cart or e-commerce modules for their clients.

Users who sign up to Google Checkout are able to design their own shopping cart module using the built-in tools, and then simply cut and paste the HTML code straight into their site. Web development agencies who specialise in building website shopping carts are going to have to adapt and come up with new and exciting ways to build shopping carts or cut their prices drastically.

The big question that remains however, is when will Google Checkout come to Australia? Google Checkout currently supports buyers from around the world, but only supports sellers in the US and UK. Google’s information pages states that they are working to “make Google Checkout available in more locations” but can’t give specific dates.

Personally, I believe that Google Checkout will dramatically change the way online businesses are established in Australia as many website owners are crying out for a viable alternative to PayPal.

The ability to control all their purchases from one login is also a massive benefit for buyers.

Google is on the move again…

Most businesses are now realising the need to be top of the search engines, and many now realise that search engine optimisation (SEO) is how to do it. But when it comes to choosing the right SEO company or service to optimise your site, many business struggle with what to look for.

For this reason, we’ve put together a bit of a guide to assist business owners and web managers deciding which SEO program is right for them.

Reporting

The first major pitfall for businesses to avoid is signing up to an SEO program that doesn’t provide adaquate reporting. This may sound obvious but there are plenty of dodgy SEO guys out there who’s reporting is an email saying “It’s going great!”

Make sure you find an SEO company that actually sends a report detailing where you rank in Google, Yahoo, MSN, etc for the keywords they have agreed to optimise. This is so you can see that in this month we went from page 3 to page 1, etc for each keyword.

Number of Keywords

The next thing to look for is the number of keywords or keyword phrases that will be optimised. SEO programs can range anywhere from 2 keywords to 150. Obviously the more keywords the better, but there’s no point an SEO firm claiming they optimise 150 keywords if you don’t get a report showing where you rank for these terms. It’s easy to say but harder to do.

I have personally seen SEO programs that cost business owners $2000 a month for 10 keyword phrases. This sort of thing is grossly overpriced.

Guarantees

If there’s one phrase that gets thrown about a lot in the SEO game it’s “no one can guarantee you top spot in Google.” While this is true to a certain extent, you still should make sure that your SEO program comes with some kind of guarantee.

If an SEO company only optimises 1 keyword phrase then they couldn’t possibly guarantee you top spot for just that one phrase. There’s too many other factors beyond their control.

However, for a company that optimises 25 keywords, they should be able to guarantee a certain amount of these on the first page. Any company that is not offering some kind of guarantee is not even sure enough of their own ability to perform quality SEO.

No guarantee means the SEO firm is not confident of their own ability.

Setup Costs

The other big thing to look out for is setup costs. Many SEO programs start with a $2000 or so setup cost plus an on-going monthly cost. When working out the overall cost, always budget for a 12 month commitment.

Even if the company says you can leave at any time, don’t pay the up front cost, 1 or 2 months then leave. Always plan for 12 months. SEO is one of those things that doesn’t happen overnight. Be patient, and realise that starting now will yield results in 9-12 months time.

If possible, it’s best to find programs that don’t have any setup fees at all.

The Final Word

So the basic piece of advice here is to make sure your SEO firm is accountable.

Reload Media offers three SEO programs and a brief summary of these programs are shown below. For more on these programs, click here: SEO services.

Use this table as a starting point to do your comparison shopping of SEO programs:

The internet is a big place, so making sure your online advertising dollars effectively reach your target market is one of the biggest challenges for managers.

When it comes to most marketing activities, whether it be a newspaper advertisement, television commercial or internet campaign, managers are always striving to choose marketing mediums that attract the most number of potential customers for their dollar.

This is where search engine marketing has a huge benefit over its more traditional rivals. SEM can obviously be targeted to the exact keywords you want, which gives you a great level of control over who your advertisements reach. By targeting the phrase “neon lighting brisbane” you can be fairly well assured that your ads are going to be displayed to those who want to buy neon lights in Brisbane.

However, not everyone includes the location when searching, meaning that someone from Perth can search “neon lighting” and click on your ad, costing you money without ever really having any intention of purchasing from you.

One way to get around this dilemma is to use what’s called ‘location targeting.’ Location targeting in programs such as Google AdWords allows your business to specify to what geographic regions you want your ad displayed.

For instance, you might want to target the whole of Australia, so you select that option. Alternatively, you can narrow down your region even further to a particular state or city.

An even better option however, is to use an ad radius, which allows you to set a certain size ring in which you want your ad displayed. For instance, you might set up your campaign so that your ads are displayed within a 50km radius of the Brisbane CBD, and only users within that radius will see your ad.

Obviously this is an extremely useful tool as it enables businesses to really target their potential local customers. One word of warning though, this is not foolproof system, as current ISP setups in Australia mean some users will not see your ads when they should.

Wrong!

But before I go into why your business should be including search optimisation as part of your marketing budget, let’s go back to the basics of exactly what marketing is.

Marketing is essentially any activity that aims to increase awareness about your brand, its products or services and reach potential customers.

What does search engine optimisation do? It aims to increase your business’ appearance in search engines, and reach more users than before, just like more traditional mediums.

To help with the thought process behind this idea, think of a search engine like you would a newspaper, magazine, or some other traditional marketing medium. The aim of placing your ad (at considerable cost) into a newspaper or magazine is to reach consumers who you wouldn’t have reached otherwise. A search engine is no different.

SEO aims to lift your site’s rankings in the search engines, exposing your business to more potential customers than before.

One major stumbling block for SEO in the past has been the reluctance of managers to spend $$$$ per month on what they considered to be web design costs. However, they are more than happy to spend thousands on print media ads that are fast losing their effectiveness.

The challenge for managers is to realise the need to treat SEO as a marketing item and not as some nuisance or web cost.

But how much should a business spend on SEO?

There are many different SEO services available, but how much you spend on SEO should be consistent with your business’ online goals and objectives.

If you currently, or would like to, achieve 40% of your sales or referrals via the online channel, then you should seriously consider spending around 40% of your marketing budget on SEO and SEM (search engine marketing).

Obviously this depends on your industry and business, but far too many businesses are not maximising their website’s earnings potential because they are not giving it a fair weighting in their marketing budgets.