Project Your Search Marketing Costs

Deciding your search marketing strategy is critical to formulating your program, especially when it comes to assessing your costs. You cannot win approval for a program when you have no idea how much you need to spend to carry it off.

To paint your cost picture, you need to go back to your strategy decisions. You need to keep your scope in mindhow broad is your program? A search marketing program that handles only a few areas of your site is not nearly as big as one that covers the whole site. Your program scope directly impacts your costs.

You must also know what your approach is to budgeting. Will you budget to build or will you build to budget? That's the shorthand way of asking whether you will add up all your possible costs and ask for that budget (budget to build) or you are being told a budget and can build a program that includes any tactics you can afford under the budget.

The budget to build approach is the most accurate, and we use it here. If, on the other hand, you are handed a budget, you use the same calculations to determine your costs, but you prioritize your most important costs and you choose your program's scope based on what you can afford.

Organic Optimization Costs

If your search marketing strategy includes organic search, you must project how much money to budget to carry out your organic optimization efforts. If you remember assessing your organic search situation in Chapter 7, you will recall that you identified which of your site's pages should match your targeted keywords, and whether those pages are stored in search indexes. As you learned, it can be quite difficult to get some pages included in the search indexin Chapter 10, we explore all of the reasons that spiders can be blocked from your site. Because it is hard to estimate the cost of eliminating these spider problems, we simplify our cost projections by assuming that we will create new pages that are designed to be crawled by the spider to replace the hard-to-crawl pages if we have to.

Even if your pages are already in the search index, you still need to work on them. You need to update the titles and content on your pages to include mentions of your targeted keywords, as discussed in Chapter 12, "Optimize Your Content." You need to make these changes not only so that your pages achieve high rankings in the search results, but also so that your title and snippet invite the searchers to click through to your site.

After you read Chapters 10 and 12, you might be able to project your costs much more closely, but you can use techniques right now to come up with a ballpark estimate. As you saw back in Chapter 3, "How Search Marketing Works," it usually costs between $100 and $200 to optimize each page for organic search. If your content costs are typically low and you are mostly editing existing pages, your costs might be closer to the $100 mark, whereas large organizations creating new pages might pay $200 or more. These costs are just averages; so if you know exactly how much it costs to create new pages or edit pages on your site, use that figure for higher accuracy. If you do not know your own costs, take into account how difficult it is to make changes to your site. If you have a simple process that requires only a few people to touch the page, you will spend much less than a large organization with intricate workflows where pages are checked by people ranging from the copy editor to the brand manager to the corporate counsel.

After you know your per-page cost, you then need to estimate the number of pages you must changewe will do that based on the area of your Web site that you targeted in Chapter 7. If the targeted area required that you optimize 10 pages for organic search, and optimization costs you $123 a page on average, you will spend $1,230 for each area of your site. If you have 100 products, that adds up to $123,000 to optimize your whole site.

Returning to our case study for Snap Electronics, you recall that Snap identified five pages it had to optimize for its digital camera campaign. To be conservative, they estimated higher costs, assuming they would have to change at least 25 pages. Because Snap had kept no records on its content-update costs, it decided to use the high-end $200 figure, yielding a $5,000 cost per product line. Because Snap has 78 product lines in the United States (its total scope of its search marketing program), Snap estimates it will cost $390,000 to optimize its content for organic search. You can see how seemingly small costs can add up quickly in a large company.

Paid Placement Costs

If you decided to pursue paid search as part of your strategy, you can project your costs with a simple exercise.

Point your Web browser to http://searchmarketing.yahoo.com/rc/srch/ and click on the View Bids Tool link, then enter one of your targeted keywords. As shown in Figure 8-3, you will be shown the top bidders for that keyword in Yahoo! along with each one's bid limitthe highest amount that each bidder will pay.

Figure 8-3. Snap's Yahoo! bid limits. Yahoo! shows the highest bid your competitors will pay per click on a result for the keyword "digital camera."

Reproduced with permission of Yahoo! Inc. © 2005 by Yahoo! Inc. YAHOO! and the YAHOO! logo are trademarks of Yahoo! Inc.

Depending on what the other bidders are doing, the bid limit might or might not be what the bidder is currently paying for each clickbut it is the amount that bidder is willing to pay. So if you want to estimate what it would cost you to take the #1 spot (for example), you would need to budget at least 1¢ more than the bid limit of the current top bidder.

Now you might not be aiming at the top spot. Perhaps you are happy with the third position, for example. (You should understand that the top three positions are syndicated to many search engines, but lower results are shown far less.) Choose the position that you want, and add 1¢ more to the current bid limit for that position. To be conservative, you might want to add more than a penny. Eyeing Figure 8-3, you can see that Snap might need to pay 85¢ or more to garner the top spot, because the first three bids are more than 80¢ each. If you outbid them, they might raise their bids.

Using an estimate of 85¢ per click, Snap can calculate the budget required for a Yahoo! paid placement campaign for digital cameras by multiplying the bid rate (85¢) by the number of monthly queries (1,337,422 as counted by Yahoo! in Table 7-10 from Chapter 7) by the estimated clickthrough rate (Snap conservatively projected 1 percent) to yield the estimated monthly Yahoo! cost of $11,368. Multiplying that cost by Snap's 78 product lines yields a cost for the overall search marketing program of $886,704 per month for paid placement. Clearly, that is more than anyone at Snap wants to risk for such an unproven idea, so they decide that they will project a much smaller cost more befitting with the experimental status they have chosen for paid placement.

Multiplying $11,368 by 12 produces the yearly paid search budget for the first campaign of $136,416, which Snap rounds up to $150,000 for its proposal. Anticipating that the experiment will be at least somewhat successful, Snap decides to double that budget for the overall program to $300,000 a year, but the outcome of the experiment will ultimately tell them whether that is the right figure.

Personnel Costs

Depending on your particular strategy, you might find that personnel costs are the largest expense in your program. Perhaps you will have just a small central search team (maybe it is just you), but whatever personnel time is expended on search will cost something. You might know exactly how much your organization allots for each person assigned to a projectif you do, use that. Most organizations budget between $75,000 and $150,000 each year for each "head count," so your company probably lands somewhere in that range.

If you can get away with it, it is best to avoid calculating the costs of the extra work your extended search team must do to support search marketing. In some organizations, you might be required to take a shot at this number, but it varies widely based on your situation. You are better off making the case that this is part of their job, and always should have been part of their job. The marketing department does not have to justify why the Web team should change copy when they develop a new sloganit is part of their job. Point out that this is part of developing a good Web site that meets your business needs, and should be absorbed as part of their current workload. You can show real return for the work you are requesting, which is more than can be said for a lot of the work they do that no one ever questions.

If you have decided to hire an external vendor, you should have received an estimate on what will be charged. You can do small one-time audits for as little as $5,000, but a full-blown program in a large enterprise can easily run hundreds of thousands of dollars. Whatever you decided, you need to include that cost in your proposal for your program.

Snap Electronics decided to staff a three-person central search team. The team leader is an experienced Snap Web marketer (who already knows the U.S. product managers) whose mission is to sell the program internally and to manage the central search team. Snap will hire an organic search expert and a paid search expert from outside the company, because they cannot seem to find those skills internally. Snap's finance department insists that all proposals use a flat rate of $130,000 per person for planning purposes, so the three-person team is budgeted at $390,000 each year.

Boutique SEO, the vendor that Snap chose, initially provided an estimate of $140,000 annually to provide strategy and keyword planning services, but Snap felt that was more than it wanted to pay. Snap wanted to keep the total personnel costs at half a million dollars or less, because investments more than $500,000 required higher-level executives to approve. Snap negotiated with Boutique to train its central search team to perform keyword planning internally, instead of doing the keyword planning at Boutique. This change reduced the annual costs to $110,000. When that $110,000 is added to the $390,000 cost for the central search team, it totals a more palatable $500,000 combined annual investment. Making this change will slow down the rate of rollout of the search marketing program because it will take longer to do the keyword planning across the entire product line, but it was believed that the tradeoff was worth it to get the program approved more easily.