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SEO and the ROI Debacle

Introduction

Corporate online sales growth will continue to suffer amid the fury of four nasty and powerfully disconcerting search engine optimization forces: tactical ignorance, an industry labor shortage, credibility woes and limited ROI accountability.

Black marks like those don't bode well for naive or lethargic businesses that may simply be turning a blind eye to how people search and the search engine visibility advances of companies in their own industries.

Although companies may be good at calculating ROI in some marketing disciplines, they can't show positive SEO numbers if they lack online measurement skills (or execution) and just sitting around waiting for something to happen.

The owner of a regional furniture chain we approached seemed surprised that someone would search online and not reach one of his stores through traditional means. After offering that sales had slowed, he showed a slight interest in SEO. He left the next steps to marketing executives who have yet to initiate any search engine optimization endeavor despite monitoring the industry for several years.

SEO gridlock prevails when jobs aren't on the line and there is no pressure to measure.

The future looks considerably brighter for search engine optimization employees or consultants - if they have a knack for this field. They'll continue to be in high demand when companies at least begin to grasp SEO and actually make a point to pay attention to their competition.

Even without a firm handle on ROI, they can succeed because quality SEO can bring targeted traffic that leads to sales despite ROI blemishes in ROI tracking systems and procedures. Ad Age recently charted agency growth in its Top 20 Search Engine Agencies list. Robert Half International includes "Search Engine Optimizer" among a new list of cutting edge jobs.

National studies and our conversations with numerous business executives indicate the following patterns:

1. Tactical Ignorance
Businesses and consultants alike often lack true SEO know-how. If they can't make the right moves or find a successful combination, search engine optimization will fall short of any expectations.

2. Labor Shortage
It's no wonder that companies often compromise or dilute their SEO efforts. They end up adding this role to existing jobs. It's not like many individuals are well-versed in design, programming languages, server technology, research, client relations, marketing, writing and much more. Businesses don't really ensure that they're adding the sharpest minds to their payrolls. And if they do have seasoned search engine optimization strategists, they often must tend to other tasks. In other words, search engine optimization gets short shrift to other corporate marketing pursuits.

Nearly 60% of marketers indicated that the shortage has affected their strategy or will impact it in the next 12 months, according to MarketingSherpa's 2006 "Search Marketing Benchmark Survey."

3. Credibility Woes
Get familiar with "black hat" and "white hat" arguments (black is bad). Spurious consultants and so-called "expert" employees abound. Unfortunately, people will try just about anything to rank highly on search engines. Credibility also suffers because of great debates about pricing, duration of work, whether "tweaking" is acceptable or an evil manipulation, what constitutes keyword stuffing, and how to define success.

4. ROI Accountability
If you don't know what you're doing and your staff is stretched thin, ROI is going to pay the price. And many consultants - with various levels of limited expertise and insights - can make it difficult for a business to see a full ROI picture. But the buck really should stop with each company. If accountability has its limits and heads aren't allowed to roll, ROI will come up short. Corporate marketers fall short when it comes to measurement. They want to achieve top rankings, but the quality of their techniques is questionable and studies in the last two years underscore that serious ROI isn't the strong suit for many businesses.

ROI also gets pelted by competing corporate interests that constantly thwart otherwise sensible online marketing initiatives. Clearly, businesses have yet to find a way for marketing to consistently work with sales, or sales and marketing to cooperate with operations. Add the IT team - including webmasters - and you have colossal turf battles while everyone tries to find or define ROI (or ignore it altogether) in the land of corporate finance.

Search firms produce far better traffic results and work more effectively than in-house programs (given their focus, expertise and collective wisdom).

The SEO industry has made strides (i.e. training, services and performance). And, increasingly businesses do identify budgets for search engine optimization - just not much of a budget given the number, size and nature of companies. For example, national studies indicate that SEO spending is up more than 100% in the last two years, according to MarketingSherpa. But that's still less than $800 million for the industry.

Again, industry growth can deceive. Savvy, strategic thinking increases the odds of success. Mere spending never ensures profitability. Along the way, our industry will be dotted with ill-timed and costly misfires that counteract the impressive campaigns.

With that kind of spending increase, search engine optimization is a hot market. But money must be accompanied by competency and effective ROI measurement. Sadly, untold numbers of businesses haven't even left the gate.

Hiring the right SEO in-house crew or a firm with a great reputation can help businesses use their cash wisely rather than just burn right through it.

Despite millions of competing website pages for a single strategic phrase, eager clients who cooperate well with successful SEO firms can rush by their competitors who are content to sit by the phone. Old-school thinkers may still be relegating SEO to their IT department or part-timers in just about any company role. It's the equivalent of a busy or preoccupied parent telling a child: "Johnny, just go outside and play now."

However, SEO is far from child's play. It has tremendous financial implications - good and bad. An SEO staffer or consultant can take a business to new heights or run amok, curtailing traffic and cutting deep wounds into conversion rates.

It's not just a self-imposed stupor that holds company's back. SEO has a credibility problem as well. The industry is laced with a shady "consultants" who break all of the rules and also a multitude of Mom and Pop enterprises that lack a deep bench of trained players who can weigh in on everything from programming to making reasoned recommendations based on key performance indicators.

In study after study, Internet users (B2B and B2C alike) prove that they like search engines and use them to research and buy products. Whether at home or work, they're spending time on Google, MSN, Yahoo! and a host of other industrial, shopping, news, music and special interest websites.

Aware of Internet behavior, marketing executives agree that the online commerce tide is undeniable. As a result, they're continuing to make adjustments by investing in online marketing programs.

Yet, more than 12 years after its debut, search engine optimization continues to get overlooked. In some respects, it's become the neglected first son of the search engine marketing family that could process $33 billion a year on a global level by 2010 (but watch how much of that goes to paid search).

Businesses seem reluctant to spend money on a marketing approach like SEO that they don't understand and one that typically comes with no guarantees.

With paid search, you can get traffic right away. You just need to pay when someone clicks and for your staff (or a consultant) to manage the budget. You'll get visitors. Ultimately, it's your fault if you go with the wrong keyword, ad copy, offer and landing page.

Skepticism of SEO is natural but not totally understandable. You need to determine whether search engine optimization is worth the time and effort before dismissing the opportunity altogether.

Instead of putting your head in the sand, type in the keywords and search phrases that you believe would bring you some sales. Go to Google. Who is in the top 10? Are you? Do you care which competitors made it? Are they comparable in size to your business?

Perplexed and confused, many companies clearly don't make it an imperative that their marketing crews embrace and maximize a search engine optimization strategy. Studies show that corporate leaders are aware of SEO, but we've found that they're not fully grasping the value of taking action or putting the pressure on staff to perform and effectively measure their efforts.

When confronted with the fact that their competitors rank well for excellent phrases, companies are at a loss about who is to blame. Maybe that's because it would be ludicrous to chastise an employee for not getting better search results if everyone knows SEO is only tended in their spare time.

Even the largest companies in the world - with vast marketing budgets - don't devote much attention to search engine optimization. You might be stunned by the major brands that don't appear in the top 10 natural Google results for search phrases like notebook computers, homeowner insurance, and cordless drills.

Admittedly, SEO is very young compared to other marketing pursuits and few firms have emerged as trusted names in the industry.

For consultants to succeed, they will need to build exceptional track records and go out of their way to educate companies about the benefits of search engine optimization. A continued movement toward specialization - firms that focus primarily on PPC or SEO - may help marketers appreciate the skill sets and the distinctions between both valuable practices.

But what's the alternative? Do nothing? Maybe throw some token dollars at search engine optimization with a one-person shop or an overworked employee? And while they do what they can, the Internet traffic will keep going to someone else.

Between 2004 and 2006, the North American search engine marketing industry grew to $9.3 billion - a 126% increase over 2004, according to the "State of Search Engine Marketing 2006" - an annual survey by the Search Engine Marketing Professional Organization.

Where did much of the money go? It ended up in the bank accounts of Google and Yahoo! Paid search (also known as Pay-Per-Click) got an amazing 85.9% of that industry total in 2006 (with search media engines gobbling up a 76.7% share of paid advertising dollars).

What about natural search engine optimization? The SEO portion of the $9.3 billion total was a paltry 11.8% or $1.1 billion (as with PPC, the vast majority of SEO spending went in-house).

The true number of dollars spent on SEO may not be known, but it's a safe bet that it's somewhat higher than the $1.1 billion SEMPO figure. Many businesses simply don't convey their online marketing spending or it's reflected in other budgets, such as IT.

Even so, it's likely low given the incredible number of websites across diverse industries that don't actively engage in serious search engine optimization.

In the U.S. alone, there are more than 25 million businesses. Surely they can spend more to promote billions of website pages. If just 1% of them (250,000) spent $10,000 a year, that would be $2.5 billion (a little bit healthier).

Apparently only a small percentage of businesses hire or train employees to skillfully lead the way with search engine optimization. In rare cases, they're outsourcing the job to consultants. Some consultants fall on their face. Other experts exceed and build their client list one referral at a time.

Don't make the mistake of confusing rankings or traffic with ROI. They're metrics, not ROI.

If you want leads or customers, now you're talking about real ROI. And who is responsible for generating the lead or a new customer? Traffic helps, but chances are the sale may or may not go through depending on the website design, the offer, the price, the user experience and much, much more.

Whether they find the funding in profits or existing budgets, businesses should pay serious attention to search engine optimization in-house or through outsourcing.

In the fray, success stories abound. Undoubtedly, there are companies who remain profitable without indulging in the presumed "mysterious" search engine optimization arena, where true professionals of all stripes hone their skills over the years (programmers, website designers, marketers, writers and more).

After all, companies rank well all of the time - 24/7 as they say. Some apply techniques and work their way to the top of the rankings charts for the most prized search terms. Others wonder how it really happened at all. Kudos to them for somehow getting the right parts in place, even if only by accident!

But what does it ordinarily take to succeed? It requires consistent design, domain longevity, reasonable keywords, quality links from authoritative websites, and text.

Why do these elements seem so tough to pull off? If there is a deficiency in any of these and other areas, overcoming the obstacle won't be easy if the business gives search engine optimization little more than a half-hearted try. A systematic, ongoing effort is necessary to see a gradual increase in rankings.

Embrace the SEO field with patience and the results can be extraordinary.

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