According to the Search Engine Marketing Professional
Organization (SEMPO), advertisers spent $4 billion in 2004 on
search marketing programs and are expected to spend 39% more than
that this year.

Search engine marketing appears to be a great way to advertise
but is it right for you and your business? If you are not already
employing search engine marketing(SEM) for you business is there
a way to forecast the return should you decide to invest in it?
Is there a way to measure the results you are getting if you have
already invested in SEM?

The answer is mostly yes. By utilizing data discovered in
recently released research surveys and with the help of a few
free online tools you can put begin to take some of the guesswork
out of search engine marketing ROI.

By using Overture’s free keyword suggestion tool
(inventory.overture.com) you can get an idea of how many times a
keyword is getting searched each month. Another free tool to use
is called Good Keywords and can be downloaded from
www.goodkeywords.com.

Let’s say for instance that you are a mortgage broker in the
Denver Colorado area and you are interested in getting more leads
for your business.  You have a website and are considering search
engine marketing to bring in some new leads. You get a quote from
a search engine marketing provider who can guarantee top 10
positions among the major search engines for 6 months for your
keywords for $1,500.00.

The question now becomes is it worth it to you to spend the
$1,500.00. To figure this out we need to look at some numbers.

Berrier & Associates estimate that 65% of all traffic generated
by a search in a search engine will go to the sites listed within
the first 10 results (first page) returned for that search. By
using Overture’s keyword suggestion tool you discover that the
term “Denver mortgage broker” gets approximately 540 searches a
month.

Using this criteria a first page position for “Denver mortgage
broker” would bring you approximately 65% of 540 searches a month
= 350 visitors to your site each month. Having a compelling title
tag in your website’s pages might even boost this visitor number
since the title tag is what appears as the clickable link in the
search results.

The formula we just used would then be applied to all the other
keywords you are targeting such as “mortgage Denver” which gets
approximately 2,600 searches a month or “mortgage company Denver”
with 466 searches a month. A first page placement for any of
those would yield similar results.

So let’s say we just use the “Denver mortgage broker” key phrase
as our example with its estimated 350 visitors a month for a
first page position. You would now need to know what your website
conversion rate is. The website conversion rate is the ratio of
leads or sales you get per visitor amount. The average website
conversion rate is about 1-2% or 1-2 leads or sales for every 100
visitors according to Shop.org.

If your website conversion rate is average then you would expect
on average 2-3 good leads from your site each month for that one
first page listing. Then depending on your sales conversion rate
which is the number of sales per leads you get on average
multiplied by your average sale price you can begin to calculate
what your return might be.

So let’s say as a mortgage broker you make roughly $2k on each
deal you broker and your sales conversion rate is 1 sale for
every 3 quality leads. In any given month then you could estimate
1 sale at $2k out of the 3 quality leads generated from your
website which came as a result of the 350 visitors you got from
being on the first page of Google, Yahoo or MSN for the term
“Denver mortgage broker”.

You paid the search engine marketing company $1,500.00 dollars
for 6 months of first page listings. From one of those first page
listings you stand to gain $2k x 6 months = $12,000.00.  That
sounds like a really good return for money invested.

In closing the methodology outlined in this article to calculate
search engine marketing ROI is by no means 100% accurate due to
several factors but it is a good way to get a “feel” for what you
might get back for your marketing dollars. Its also a way to get
business owners to start thinking about how to better track their
e-business. 

Charles Preston is an Austin based SEO with over 7 years of
industry experience. Charles is also the President of Click
Response an internet marketing company focused on teaching small
businesses how to get the most out of their internet marketing.
For a free consultation or more information please visit
http://www.clickresponse.net