Stuart Larkins is vice president of media at Performics, a Chicago-based online marketing services firm specializing in customer acquisition for multichannel marketers. He talked to Direct about how to measure return on investment with search engine marketing.
DIRECT: How do you recommend marketers measure results in SEM?
LARKINS: By far, the most effective form of measurement for a sales-driven program is keyword ROI, a comparison of the price paid per click vs. results achieved. Usually the goal is sales or some type of other measurable transaction.
DIRECT: Clickthroughs don’t cut it anymore, right?
LARKINS: Clickthroughs are just the beginning. Marketers need to know what keywords are converting and how, and what the ROI for the bid price is. Instead of clickthroughs, we have to focus on what each individual keyword delivers. So if a keyword costs you 50 cents a click, and you get 100 clicks, that’s going to cost you $50. So if you don’t generate enough sales to justify 50 cents a click, it’s not a profitable ROI. The continual process in managing ROI with search engine marketing is to pull each keyword down to a profitable level.
DIRECT: Are you looking for a lot of clicks?
LARKINS: Not necessarily. It’s a finite science. You could charge 50 cents a click and not get any clicks for 99 clicks, but on the 100th click get someone who buys something that costs $5,000. Then that sale could make that 50 cents a word profitable. If you know you’re only going to drive one sale out of a number of people who click on a keyword, that one sale has got to be a big sale and enough to cover your costs for those 100 clicks.
DIRECT: Does a marketer always have to pay top dollar to hold onto the top position in search results?
LARKINS: It’s all market driven. So if you pay only 30 cents, you might drop down to the third or fourth position on a search engine and you don’t get that many people clicking on your keyword. At that point you have to ask,
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