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How to establish a financially sound approach to search marketing

A lot of people will tell you about the tactical details of managing a search program (and by “search” I’m referring to paid and natural search, not just one or the other). Some will tell you about the strategic details.

Very few will talk about the financial details.

Yet in some respects, it’s finance-driven principles that can sometimes make all the difference between mediocrity and true success. And unfortunately, I find that more often than not, an organization’s finance department has only minimal exposure (if any) to the inner workings of a search marketing program. That’s a mistake in my opinion, especially for organizations that can directly tie online conversion to revenue (e.g. e-commerce businesses and lead-gen businesses that can track online leads all the way through to sales conversion).

If you find yourself in this situation, here are some initial steps that you can take to bring a more finance-centric approach to search marketing:

  • Start by managing paid search and natural search as one portfolio instead of completely separate programs. This is especially important if you manage a large brand that drives a significant amount search traffic from branded keywords. Understanding how paid search spend impacts paid, natural, and aggregate search revenue can lead to significant strategic insights that can drive an increase in overall program efficiency.
  • Understand the concept of paid search cannibalization. Believe it or not, there are several types of cannibalization, and not all of them are bad for business. Moreover, there are a variety of tests that you can setup in order to get a better understanding of how paid search impacts natural search and vice-versa.
  • Set specific goals for incremental search revenue and efficiency. Start by setting a goal for the year in terms of YOY growth. So for example, if you generated $100,000 in revenue from search in 2011, set a goal of growing by 50% (e.g. $150,000) in 2012. Then break down what your monthly and quarterly totals need to be in order achieve that goal. Then factor in your costs (yearly, quarterly, monthly) and use that number to figure out how efficient your program is (e.g. how much revenue you generate for every dollar that you spend on costs).

Enterprise-caliber brands already utilize these techniques to more tightly manage and grow their search marketing programs, but there’s nothing really stopping you from doing the same. All it takes is a little financial planning.

 

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