Pay for Inclusion vs. Pay per Click
Choosing The Right Search Engine Strategy
Pay Per Click Advertising:
Back in the old days of the Internet - in 1993 - there were 284 locations on the entire World Wide Web. According to Bill Clinton, only 8 of them ended in .com or .net when he was sworn into office. As of January 1, 2003, there were 171,000,000 domain hosts in use.
In 1995, the largest search engine database was Altavista, and it had most of the Internet categorized. Today Google and FASTsearch own the largest databases. Yet neither one of them has even 10% of the Internet covered. It's estimated that since the year 2000, more than 8,000,000 web pages have been added to the Internet every day. None of the search engines are able to keep up to this pace. So how will your web site stand out? How will it acquire the traffic it needs to be successful? There are many ways to approach the issue of Internet marketing, but for the sake of this article, we'll concern ourselves solely with two tools to expedite success. In that vein, we'll concern ourselves with Pay for Inclusion and Pay for Placement (or Pay per Click) advertising.
What is Pay for Inclusion?
Some engines, such as AltaVista, Inktomi, Looksmart and FAST, use a pay for inclusion model. What this means is that to be guaranteed to be found within their specific search engine database, or index, the web site operator must pay a fee to be listed. It's similar to the fee a business pays for a Yellow Pages listing. These fees vary from monthly to annual. Looksmart charges an inclusion fee, plus $0.15 per clickthrough.
Engaging a Pay-for-Inclusion, or pay per click advertising, service does not come with any placement guarantees. If your web site is not properly optimized, but you paid an inclusion fee, it is guaranteed to be indexed by the search engine spider, and listed somewhere within that search engine. If you want to ensure success with a Pay-for-Inclusion search engine, then your web site must still be optimized. Without proper optimization, which includes an analysis from the perspective of all the factors that the search engines look for, a pay for inclusion service will not deliver the desired benefits to the web site operator.
When properly matched with a comprehensive Search Engine Optimization regimen, a Pay for Inclusion program will result in powerful results: Qualified Traffic and Customers.
What is Pay for Placement, or Pay per Click?
Pay per Click advertising is the process by which a web site operator can arrange for a web site to be placed in a pre-defined position within certain search engines, such as Overture. Search Engine Placement is always a Pay-Per-Click solution. While advertising web sites are only permitted to buy advertising in search queries that are relevant to their content, they are not sorted by relevance but rather purely based on bid value.
Pay per click services allow advertisers to bid for each visitor directed through to their web site, based upon the number of clicks the ad receives. Pay per Click search engine placement should be realistically viewed for what it is - an online auction. Advertisers bid against each other for a fixed position within a list of search results. The advertiser who bids the most is given the top spot in the list. Each advertiser bids according to their budget, and has to know his or her Return On Investment (ROI) to determine how much money should be spent on acquiring new customers.
How Do I Know Which Strategy Is Right For My Web Site?
For those advertisers where the ROI is sensible or worthwhile, pay per click search engines are valuable customer acquisition tools. But is it right for your web site? While it can be expensive, here's a way for you to easily determine the ROI for your online business, and determine if it is the right Internet marketing tool for you. Take out a sheet of paper, and at the top of the sheet mark down the average price of the goods you sell - we'll use $100.00 for the purpose of the example. From that number, make some simple and basic calculations, outlined here:
- $100.00 Selling Price
- ($ 50.00) Cost of Goods
- ( $ 5.00) Transaction Cost (bank charges, credit card)
- ( $ 8.50) Shipping Fees (This assumes you're delivering a product, it needs a box, label, and has a delivery cost.
- ($ 10.00) Customer support costs - time on phone, email, etc...supporting and processing the transaction. What's 1 hour of your time worth?
- $ 26.50 Margin
Assuming this margin is correct for your web site, is a Pay per Click campaign right for your needs? You'll need to look at your web site traffic reports to judge this properly. You need to determine how many of your visitors are converting into buyers. IF your web site has a 4% conversion rate (visitors to buyers), and your category is moderately competitive, you will probably need to budget at least $1.00 per click, and up to $5.00+ per click, to ensure placement in spot #3. Spot #3 is important because more often than not it's the top 3 spots per page of search engine results that are reserved for Pay per Click advertisers.
Assuming your web site gets into the top three spots, here's how the math works if you get 100 clicks in a month. Since it's all percentage based, the same holds true if you get 25 clicks or 10,000 clicks.
- 100 clicks @ $1.00 per click = $100.00 cost.
- 4% conversion = 4 sales = 4x $26.50 (margin on sale) = $106.00 margin
- Cost = $100.00
- Margin = $106.00
- Profit = $ 6.00
So, if the above is true, and IF the pay per click advertisement sent your web site 100 visitors per month, you would earn $6.00 from the campaign. Would you make much less having spot #4 instead of spot #3? If it meant one less sale a month, but it cost $0.00 per click instead of $1.00, then it would be worth it. You would make $70.00 more by selling less! Does spot #3 get much more traffic than relevant results in spots 4 through 10? Not at all for spot # 4, 5, 6, and only a little bit more for spot #'s 7-10. Remember, people usually look at the title or site description to see if it is relevant. Pay per Click is worth spending the money on if your web site is not found under any relevant queries in the top 20, but its value drops quickly if a web site is found easily in the free listings within the search engines.
Is Pay for Inclusion Less Expensive?
If we use the same calculation as above, and your web site had 4 sales from a pay for inclusion engine where you paid $39.00 per year, or $3.25 / month, your profit would have been $103.25.
What About The Cost Of Search Engine Optimization?
Search engine optimization does not have to be expensive. You can do the work yourself, but you need to ensure that it makes sense to do so. By this I mean, is doing it yourself a cost efficient business proposition? Any time that you as an individual put into the search engine optimization process is time that you take away from business fundamentals and essentials. It's time away from customer support, content creation, service, administration, product research, other marketing, etc... What is that time worth? It's got to be part of the ROI calculation too. More and more people are choosing to outsource this work. It's estimated that 70% of online businesses will outsource non-core operations this year. It only makes sense. It's smart business to focus on what you know and do well and to hire others to support you in the other areas. Not many smart businessmen write their own contracts - they get their lawyers to do it. They want to ensure it's done right. Doing it right in the first place saves money in the long run. Outsourcing means getting someone else to do the work for you, properly. It does not mean getting someone to tell you what to do, or how to do things.
Which Is Right For Your Web Site?
In the long run, a web site operator that has a well optimized web site will beat out a non-optimized web site that concentrates on Pay per Click advertising for customer acquisition every day of the year. He may make fewer sales in a year, but he will make more profit from each sale. If the web site is properly optimized, it will enjoy better placement in more search engines. This means it will survive, and prosper in the long run.