September 2008
Budgeting for SEM in a Tough Economy
Ah, September. Here in Atlanta, the temperatures have dropped to the not-so-crisp low 80's, and the leaves are still stubbornly green, but it's unmistakably autumn. In the business world, fall also means it's budgeting and planning season. While predicting revenue and expenses for an entire upcoming year is always a challenge, it can be especially difficult during an economic downturn like we're experiencing now. How many customers will you have in 2009, how much will they spend with you, and what should you invest to bring in and service those customers? It's during times like these that we all wish we had a crystal ball.
With many marketing budgets shrinking currently, companies are focusing their efforts on the marketing vehicles that are the most measurable. Just about every online marketing tactic - yes, including search marketing - is measurable. We've seen our clients pulling budget dollars out of traditional print publications, catalog mailings and Yellow Pages advertising in order to invest in search marketing and other Internet-based media because they can calculate return on investment.
If you're deciding to invest in search marketing for 2009, here are some things to consider when budgeting. First, search marketing is not a project; it's a long-term, ever-evolving effort that builds on itself over time. On the Search Engine Optimization (SEO) front, new web pages need to be optimized as they're added, underperforming search terms should be swapped out, key metrics need to be analyzed and responded to, and it's critical that link-building continue on an on-going basis. In terms of Pay-Per-Click (PPC), bids and budgets need to be continuously managed, underperforming search terms removed, creative messaging and landing pages tested, Quality Score watched, and so on. So beware of any search marketing agency that positions their services as a short-term project.
Also, be sure you understand how the agency is compensated for handling your PPC campaign. Many take a percentage of the budget you've set aside to pay the search engines for clicks. This method can sometimes result in you paying too much (managing a campaign with a big budget doesn't always take that much more time than managing a campaign with a small budget) or too little (so you may not get the time and attention you deserve). Some agencies sell clicks at a flat cost per click - this is our least favorite method of charging. It incents the agency to buy the cheapest clicks possible (maybe on relevant search terms, maybe not) so as to keep the margins on each click fat. In our opinion, paying the agency a flat, monthly fee is the fairest approach for both parties. This way, you know exactly what you're spending for each click and the agency can rightly focus on driving traffic that converts for you rather than manipulating budgets or bids to their benefit.
We are often asked, "How much should I budget to pay the search engines for PPC clicks?" That's a difficult question to answer because it varies tremendously by company and by industry. The answer really is "As much as you want - more if you want to drive more traffic and sales, and less if you want to drive less traffic and fewer sales." We've had a few clients with unlimited budgets - as long as our ROI remained positive, they wanted us to buy as much traffic as was available. But this often isn't realistic with corporate budgeting policies. If you're new to Pay-Per-Click, a realistic range to start with may be in the $2,000 - $10,000 per month range (assuming you're not in a high traffic, consumer category). One of the advantages of PPC is that it's very easy to change the budget at any time - so see what your results are and adjust accordingly.
That should help you budget for your PPC media spend. What about your agency? Fees there will also range quite a bit, depending on your company, your industry, the size and complexity of your website, whether you're targeting other countries or languages, etc. It'll also depend on which services the agency is providing - some are more bare bones and others include a lot of extras, so be sure you have a solid understanding of exactly what you're getting. Experienced, reputable agencies tend to charge in the $2,500 - $7,500 per month range (or more) for a combination of SEO and PPC.
While it can take some time for results to build, everything your search marketing agency will do for you is measurable. That should make it easier to sell to your C-level executives, as well as a smart way to invest a limited marketing budget during a tough economy.
About Us
Prominent Placement, Inc., is a full-service, award-winning search engine marketing firm based in Atlanta, GA, serving clients throughout the US since 2001. We provide strategic search marketing solutions, delivering efficiencies that traditional marketing channels can't touch, with a level of client service that can't be matched. We manage the entire SEM process, so that businesses can focus on what they do best. Because every business is unique, so are the recommendations we make, backed by hard numbers that give decision makers the confidence and knowledge they need to make smarter decisions.
For more information, visit our website or call 888.SEM.MKTR.
