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A Simple, Sample SEM Performance Model – How Much To Spend November 12, 2009

Posted by nadzent in Search Engine Marketing, Strategy, The Basics - SEM 101, Tips.
Tags: , , , , , , , , ,
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One question I hear time and again is “How much should I spend on Search Engine Marketing?” Well, to be honest there is no true answer to that question. When considering this for your business please answer the following questions:

  1. What is your business goal or objective (increase leads, sales, downloads, reservations, brand recognition, new product launch, etc.)
  2. What actions are available at your web site (i.e. newsletter sign-up, purchase, information request, etc.)
  3. How much budget do you have available for your total marketing efforts
  4. What other marketing are you doing, online and off
  5. What has been your past experience with SEM or other online advertising
  6. Are you hoping to attract local, national or global searchers to your web site
  7. What is your success metric (ROI, CPA, ROAS, CTR, Clicks, etc.)
  8. Is there a seasonality to your business
  9. What is the conversion rate at your web site today (how many people who visit take an action – actions/clicks)
  10. What is the average value of a conversion (dollars, leads, profit, etc.)

Once you have answered these questions you will be able to design your campaign model. You will need to create a keyword list based on your goals and objectives with the success metric in mind. You can use Google’s keyword tool to assist in this task. Take anything you’ve learned from past search engine marketing, email or online display campaigns and work that into your design. Are you targeting a zip code, the Northeast, Canada or the entire North American footprint? Do you have any promotions, direct mail, TV, radio or email campaigns scheduled for the period you plan to run your SEM campaign? Choose your flight dates based on seasonality trends – high season will see more competition and higher CPCs. Low season will offer less competition and lower CPCs but also less volume of opportunity (fewer people searching).

Take you keyword list to the Google Traffic Estimator tool. Use the settings based on your answers to the above and see what Google spits back to you. Though the tool is never 100% accurate it does give you some idea of what you can expect in terms of cost and scalability. I recommend running the estimate two times, once with no daily budget to see what 100% market share would look like, and one with a realistic daily budget based on your scenario above.

Once you know the estimated daily clicks you can extrapolate that out to impressions and multiply by 30 to get a monthly view using the formulas in the table below. Decide what you want your results to look like by making the Total Cost cell a variable and play around with it. If you are looking for a certain percentage of market share, or Impression Share, then you need to open up your pockets and take everything the search engine can offer.

Though Google is the only search engine with an estimator tool right now, you can figure that if you also include Yahoo! and Bing (Microsoft AdCenter) to your campaign you can increase the total impression number by about 30% and drop the CPC by a few pennies.

Simple, Sample Performance ModelDOWNLOAD Sample SEM Performance Model – pdf

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