Search spend vs clicks, a missed opportunity?

In Rand’s recent post about SEOmoz turning into a software as a service company, he shared the following graph to illustrate why SEO is a missed opportunity in the competitive landscape.

While I do think investment in SEO often has the highest ROI of any online marketing spend and many businesses of all sizes underspend and under-utilize search optimization, the graphs used in Rand’s post (and shown below) don’t tell the whole story.

spend vs clicks

Someone once told me to always beware of pie-charts, and I have to agree. First off, lets call the search channels what they actually are natural or paid search. Not every click on an unpaid listing in a SERP is a result of SEO efforts. (Also not every paid search click is necessarily pay-per-click. CPA is now making its way making its way into paid search results.)

A study in 2008 implied that around 10% of searches are navigational, 80% are informational and another 10% are transactional. You can find definitions of these keyword types from the leaked Google Quality Rater guidelines [PDF]. Lets look at these ‘keyword spaces’ across both the paid and natural search channels.

Navigational – 10% of search clicks
If a brand isn’t ranking for its own navigational searches, they are already beyond help. The vast majority of navigational searches for a brand/website will result to that brand/website without any optimizations. Navigational SEO will likely have low incremental yields unless the website is already royally screwed up to begin with. Brands should probably run paid search ads for these terms, but only because they are cheap clicks and basically forced to defensively buy these ads by the search engines. Optimization around these paid search ads will also not create success and mostly just cannibalize natural search.

Informational – 80% of search clicks
SEO is great for information searches. It’s really fucking great. Look at About.com, Mahalo.com, Demand Media and plenty of other content portals that have a business model driven solely from aggressive SEO on informational queries. Of course, Wikipedia is the dominant player, likely getting around 2% of ALL Google downstream traffic (2007 data). Informational searches are less competitive and have more words per search which create more variation in word use and order. There are a ton of these searches! There’s still plenty of space to play in informational search.

So what’s the problem with informational search? It’s great and easy to measure if you’re selling ad space, but if you are all about customer transactions, it’s more difficult to measure success. The problem with gauging the success is not in the search tools but with the internal client analytics and CRM. Can you attribute customer acquisition and lifetime value to a informational search that occurred days, weeks or months ago? Can informational searches claim they retained a customer that would have otherwise gone inactive?

Transactional – 10% of search clicks
The search engines themselves have provided simple and effective tools to judge success of transactional searches with paid search tracking pixels and Google Analytics. Because judging success is more straightforward with these keywords, paid search spend skyrockets to the limits of what is deemed effective ROI, and the majority of paid search spend is placed on these keywords. In less competitive areas, this is where SEO is a huge win. In competitve areas, this is the space where SEO is hard and brand strength(domain authority, ‘trustrank’) matters more than your clever linkbuilding campaign and perfect on-page optimizations.

Is SEO a missed opportunity? Yes, but so is all of the informational search space. Will this change? Honestly, I’m not too optimistic, but I don’t think it’s SEO tools, training or awareness that is missing. The fundamentals of SEO are increasingly just proper website usability/architecture, viral marketing, brand building and marketing analytics- not some secret skillset that only SEO experts have.

What is needed is stronger client analytics with a more rigorous definition of success beyond the immediate event or purchase. This will help justify any ‘informational search’ spend and also the trendy social media budget.

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