Both Yahoo! and Microsoft have confirmed that they will start testing the Bing algorithm live on some Yahoo! traffic this month. One of the big questions from the SEO perspective is what happens to Yahoo! Site Explorer ? If it goes away then webmasters will need to get link data from web indexes built by SEO companies, perhaps either Open Site Explorer and/or Majestic SEO . Yahoo! also offers a link: search in their BOSS program . While they have stated that the BOSS program will live on , there is little chance of the link: operator working in it over the longrun as Bing has disabled inbound link search on Bing. Blekko , which is a soon to launch search start-up, doesn’t have much to lose in sharing data. In the short run anything to gain awareness will likely make them money in the longrun. And so they are doing just that : Blekko is also showing just about all the behind the scenes data that they have to determine rank and relevancy. You can see inbound links, duplicated content and associated metadata for any domain in their index. Blekko will also come with custom slashtags which users can use to personalize search. And end user feature for average users? Not sure. But it will be interesting to web developers & power searchers. There are already heated debates in the comments on TechCrunch on if people will use that feature. IMHO the point isn’t for it to be an end user service for average searchers, but to be one which generates discussion & builds loyalty amongst power users. And clearly it is working. They are also following the Jason Callus-Anus strategy of anti-SEO marketing (while giving SEOs tons of free data) The SEO gamers, content farmers and link shoppers are not going to be happy. These guys are flooding the web with content designed to turn a profit, not inform, and the searcher pays the price. One company alone generates literally tens of thousands of pages every day that are solely designed to make money from SEO traffic. Slashtags are the perfect way to bypass them and search only the sites you like. One more reason the content farmers aren’t going to be happy: we’re opening up all the data that is the core foundation of their business. Link data, site data, rank data - all there for everyone to see. In one fell swoop the playing field just got leveled. I think a core concept which many search engines have forgot (in an attempt to chase Google) is that if you have a place in the hearts and minds of webmasters & web developers then they will lead other users to your service. Money is one way to buy loyalty. And Google will pay anyone to syndicate their ads, no matter what sort of externalities that leads to. But now the web is polluted with content mills. Which is an opportunity for Blekko to differentiate. Since Yahoo! is a big publisher they had mixed incentives on this front. They do share a lot of cool stuff , but they are also the same company which just disappeared the default online keyword research tool and replaced it with nothing, and they recently purchased a content mill . This was a big area where Bing could have won. They created a great SEO guide & are generally more receptive to webmaster communications, but they have fumbled following redirects & have pulled back on the data they share. Further, if you look at Bing’s updated PPC guidelines , you will see that they are pushing out affiliates and chasing the same brand ad Dollars which Google wants. Bing will be anything but desperate for marketshare after they get the Yahoo! deal in place. Blekko goes one further than the traditional sense of “open” for their launch. They not only give you the traditional open strategy : Furthermore, we intend to be fully open about our crawl and rank data for the web. We don’t believe security through obscurity is the best way to drive search ranking quality forward. So we have a set of tools on blekko.com which let you understand what factors are driving our rankings, and let you dive behind any url or site to see what their web search footprint looks like. but they also offer a “Search Bill of Rights” which by default other search companies can’t follow (based on their current business models): 1. Search shall be open 2. Search results shall involve people 3. Ranking data shall not be kept secret 4. Web data shall be readily available 5. There is no one-size-fits-all for search 6. Advanced search shall be accessible 7. Search engine tools shall be open to all 8. Search & community go hand-in-hand 9. Spam does not belong in search results 10. Privacy of searchers shall not be violated And so based on the above they appeal to… anyone who submits themselves to the open ideology journalists who hate content mills searchers who hate junk search results SEOs & webmasters who like free data programmers who like to hack and tweak people interested in personal freedom & privacy From a marketing perspective, their site hasn’t even launched yet and there is *at least* a half-dozen different reasons to talk about them! Pretty savvy marketing.

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Blekko Cozy Up to Webmasters, Offers Killer SEO Data Free

by Jennifer Laycock Every now and then Search Engine Guide’s Associate Editor Stoney deGeyter finds himself on the phone with a potential client trying to talk them into putting their conversation on hold and giving me a call. Why? Because they’re in a position where they need to focus on both social media and search engine optimization to build a successful site, but they only have the budget to do one at a time…and at this time, they need to put search engine optimization on hold and focus on social media. As much as Stoney enjoys working with companies to make sure their sites are search engine friendly and their content is fully optimized, the truth is his services are not always going to deliver the best bang for their buck. There are times when it simply makes more sense to focus on social media. In fact, making the right choice of where to start your marketing efforts can be essential to generating the additional revenue needed to invest in BOTH Social Media and SEO. (sound familiar? You must have been here Tuesday…) If you’re in the position of trying to figure out where to start, here are three key ways to decide social media is your best starting point. (On Tuesday , we looked at when it’s best to begin with Search Engine Optimization.) Clue #1 When You are Launching a Brand New Web Site If your business is new to the web or you’re just getting ready to launch a new site, social media may be the best place for you to start. Brand new sites often  take time to achieve rankings because they lack the age, the content and the links that are important parts of search engine algorithms. These three things take time to gather, but social media is a highly effective way to speed up the process. At its core, social media is about building and expanding the conversation around a particular product, service or company. A natural byproduct of this exposure is links, often highly relevant ones. These links lay an important foundation for later search engine optimization efforts. At the same time, the ability to analyze the value of social media related traffic and the topics that drive the highest levels of conversation and conversion factor heavily into the long term content strategy required for good search engine optimization. Clue #2 When Your Product or Service is an Impulse Buy Maybe you are one of those companies that has been blessed with an amazing product that’s both affordable and extraordinarily unique. You sell the kind of product people see and say “I want that!.” Generally, these products are cheap enough to qualify as an impulse buy (think kid trends like SillyBandz or adult temptations like Salted Caramel Chocolate Cupcakes in a Jar ) but sometimes they’re just plain jealousy-inducing cool (think any product by Apple.) These are the products that we buy because we want them, not because we need them. These are the perfect types of products for the social media world. Especially if they’re new. Millions upon millions of Internet users take to blogs, Facebook, Twitter and hundreds of other sites to share their daily lives. This includes talking about the things they love and the things they want. If this is the type of product you sell, chances are high you’ll be better served by a word of mouth driven social media campaign than by making it easier for people to find your product. This is a great clue you should prioritize social media. Clue #3 When You Sell Something People Don’t Even Know They Want Sometimes your biggest battle is simply getting people to notice you. If you’re breaking new ground by targeting a new niche or introducing a new product or service that’s never been offered before, social media is where you need to start. Let’s say you are introducing a completely new piece of  core cardio exercise equipment like nothing else on the market. You’re going to be faced with the type of challenges that make social media an essential first step in your online marketing campaign. You’ll need to build awareness of the product (to drive search activity later), educate about the product (to drive purchase activity later) and gain exposure for the product (to drive word of mouth.) Consumers can’t search for the product they don’t know exists. Social media allows you to get your product in front of you target audience by relying on existing conversation channels populated by your product’s target audience. It’s a Chicken or the Egg Argument, but it Depends on Your Goal If I had my way, every company would have the ability to fully invest in both social media and search engine optimization. (They’d have budget for PPC, conversion analysis and analytics to boot!) That’s not the reality of business though, so we’ve got to find the best way to work with what we have. Much like the chicken or the egg argument, it depends on your ultimately goal. If your primary goal is to eat and eat now, the egg is your best bet. It’s fast, it’s easy, it’s tasty and it’s good for you. If your primary goal is to make sure several people can eat for awhile, then the chicken is the better bet. It will regularly produce small amounts of food to keep you going while you seek out other sources of nourishment. Search and social can work in the same way. Both are important, but both have to be viewed in the context of their potential. As yourself what the primary goals of your online marketing campaign are for the next six months and then reconsider the points made here. More often than not, either search or social will rise to the top as an important priority. Invest your funds there and establish a solid base for moving forward. Be sure and visit our small business news site.

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How to Know When Your Site Needs Social Media Before SEO

This is one of a regular series of posts on search experience updates. Look for the label This week in search and subscribe to the series. - Ed. Speed is a common theme at Google—the notion of speed is baked into all of our products, from Google Chrome to web search. Often, we also simply develop features that help deliver answers fast. Whether by displaying the exact content you’re looking for at the top of your search results page or by optimizing the way you search, many of these speed enhancements save you keystrokes—and time. This week, we released two new features: Sunrise and Sunset Search feature Whether you’re looking to find the best time for a morning jog or trying to plan that perfect moment for a wedding proposal, knowing exactly when the sun rises or sets can always be helpful. This week, we were happy to launch a Sunrise and Sunset feature for search. It gives the precise times of sunsets and sunrises for any location around the world. Unlike the weather, sunrises and sunsets are quite predictable , and as a result, we don’t use a data source. Instead, we calculate sunrise and sunset times based on latitude, longitude and the current time. This calculation has been of interest to astronomers and mathematicians for millennia, so they’ve had time to get it just right. And for most locations, it’s accurate to within a single minute. Example searches: [ sunrise port jefferson ny ] or [ sunset cancun ] Google Search by Voice expanded to more languages Google Search by Voice enables people to search the web faster than ever before—getting you answers with fewer keystrokes. This service was originally launched in English, and was offered in the U.S., UK, India, Australia and New Zealand. We later introduced Japanese and Mandarin to expand the number of possible users. Just a week ago, we launched the service in French, Italian, German and Spanish. Given that local dialects are a factor in the performance of speech recognition, we first launched our service in the four countries most closely associated with these languages: France, Germany, Italy and Spain. This week we followed with Korean and the launch in Taiwan of Traditional Mandarin. To get started with Google Search by Voice, visit the Google mobile page in your country’s domain (for example, in France go to m.google.fr ) and download the application for your phone’s operating system in your locale. You’ll find this available for iPhone, Android and Blackberry phones. Ultimately, our goal is to bring Google Search by voice to speakers of all languages, so stay tuned for more announcements here. We’ll see you back here next week for more new announcements. Posted by Johanna Wright, Director of Product Management, Search

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This week in search 6/27/10

This is one of a regular series of posts on search experience updates. Look for the label This week in search and subscribe to the series. - Ed. Speed is a common theme at Google—the notion of speed is baked into all of our products, from Google Chrome to web search. Often, we also simply develop features that help deliver answers fast. Whether by displaying the exact content you’re looking for at the top of your search results page or by optimizing the way you search, many of these speed enhancements save you keystrokes—and time. This week, we released two new features: Sunrise and Sunset Search feature Whether you’re looking to find the best time for a morning jog or trying to plan that perfect moment for a wedding proposal, knowing exactly when the sun rises or sets can always be helpful. This week, we were happy to launch a Sunrise and Sunset feature for search. It gives the precise times of sunsets and sunrises for any location around the world. Unlike the weather, sunrises and sunsets are quite predictable , and as a result, we don’t use a data source. Instead, we calculate sunrise and sunset times based on latitude, longitude and the current time. This calculation has been of interest to astronomers and mathematicians for millennia, so they’ve had time to get it just right. And for most locations, it’s accurate to within a single minute. Example searches: [ sunrise port jefferson ny ] or [ sunset cancun ] Google Search by Voice expanded to more languages Google Search by Voice enables people to search the web faster than ever before—getting you answers with fewer keystrokes. This service was originally launched in English, and was offered in the U.S., UK, India, Australia and New Zealand. We later introduced Japanese and Mandarin to expand the number of possible users. Just a week ago, we launched the service in French, Italian, German and Spanish. Given that local dialects are a factor in the performance of speech recognition, we first launched our service in the four countries most closely associated with these languages: France, Germany, Italy and Spain. This week we followed with Korean and the launch in Taiwan of Traditional Mandarin. To get started with Google Search by Voice, visit the Google mobile page in your country’s domain (for example, in France go to m.google.fr ) and download the application for your phone’s operating system in your locale. You’ll find this available for iPhone, Android and Blackberry phones. Ultimately, our goal is to bring Google Search by voice to speakers of all languages, so stay tuned for more announcements here. We’ll see you back here next week for more new announcements. Posted by Johanna Wright, Director of Product Management, Search

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This week in search 6/27/10

This is one of a regular series of posts on search experience updates. Look for the label This week in search and subscribe to the series. - Ed. Speed is a common theme at Google—the notion of speed is baked into all of our products, from Google Chrome to web search. Often, we also simply develop features that help deliver answers fast. Whether by displaying the exact content you’re looking for at the top of your search results page or by optimizing the way you search, many of these speed enhancements save you keystrokes—and time. This week, we released two new features: Sunrise and Sunset Search feature Whether you’re looking to find the best time for a morning jog or trying to plan that perfect moment for a wedding proposal, knowing exactly when the sun rises or sets can always be helpful. This week, we were happy to launch a Sunrise and Sunset feature for search. It gives the precise times of sunsets and sunrises for any location around the world. Unlike the weather, sunrises and sunsets are quite predictable , and as a result, we don’t use a data source. Instead, we calculate sunrise and sunset times based on latitude, longitude and the current time. This calculation has been of interest to astronomers and mathematicians for millennia, so they’ve had time to get it just right. And for most locations, it’s accurate to within a single minute. Example searches: [ sunrise port jefferson ny ] or [ sunset cancun ] Google Search by Voice expanded to more languages Google Search by Voice enables people to search the web faster than ever before—getting you answers with fewer keystrokes. This service was originally launched in English, and was offered in the U.S., UK, India, Australia and New Zealand. We later introduced Japanese and Mandarin to expand the number of possible users. Just a week ago, we launched the service in French, Italian, German and Spanish. Given that local dialects are a factor in the performance of speech recognition, we first launched our service in the four countries most closely associated with these languages: France, Germany, Italy and Spain. This week we followed with Korean and the launch in Taiwan of Traditional Mandarin. To get started with Google Search by Voice, visit the Google mobile page in your country’s domain (for example, in France go to m.google.fr ) and download the application for your phone’s operating system in your locale. You’ll find this available for iPhone, Android and Blackberry phones. Ultimately, our goal is to bring Google Search by voice to speakers of all languages, so stay tuned for more announcements here. We’ll see you back here next week for more new announcements. Posted by Johanna Wright, Director of Product Management, Search

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This week in search 6/27/10

This is one of a regular series of posts on search experience updates. Look for the label This week in search and subscribe to the series. - Ed. Speed is a common theme at Google—the notion of speed is baked into all of our products, from Google Chrome to web search. Often, we also simply develop features that help deliver answers fast. Whether by displaying the exact content you’re looking for at the top of your search results page or by optimizing the way you search, many of these speed enhancements save you keystrokes—and time. This week, we released two new features: Sunrise and Sunset Search feature Whether you’re looking to find the best time for a morning jog or trying to plan that perfect moment for a wedding proposal, knowing exactly when the sun rises or sets can always be helpful. This week, we were happy to launch a Sunrise and Sunset feature for search. It gives the precise times of sunsets and sunrises for any location around the world. Unlike the weather, sunrises and sunsets are quite predictable , and as a result, we don’t use a data source. Instead, we calculate sunrise and sunset times based on latitude, longitude and the current time. This calculation has been of interest to astronomers and mathematicians for millennia, so they’ve had time to get it just right. And for most locations, it’s accurate to within a single minute. Example searches: [ sunrise port jefferson ny ] or [ sunset cancun ] Google Search by Voice expanded to more languages Google Search by Voice enables people to search the web faster than ever before—getting you answers with fewer keystrokes. This service was originally launched in English, and was offered in the U.S., UK, India, Australia and New Zealand. We later introduced Japanese and Mandarin to expand the number of possible users. Just a week ago, we launched the service in French, Italian, German and Spanish. Given that local dialects are a factor in the performance of speech recognition, we first launched our service in the four countries most closely associated with these languages: France, Germany, Italy and Spain. This week we followed with Korean and the launch in Taiwan of Traditional Mandarin. To get started with Google Search by Voice, visit the Google mobile page in your country’s domain (for example, in France go to m.google.fr ) and download the application for your phone’s operating system in your locale. You’ll find this available for iPhone, Android and Blackberry phones. Ultimately, our goal is to bring Google Search by voice to speakers of all languages, so stay tuned for more announcements here. We’ll see you back here next week for more new announcements. Posted by Johanna Wright, Director of Product Management, Search

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This week in search 6/27/10

Anyone who has been an SEO consultant knows that SEO is often bolted-on as an after-thought. Which is, of course, the worst way of doing SEO. Part of the problem is that SEO is often thought of, by clients, as a fix. It is a fix applied to solve the unforeseen problem of not showing up in search engine result pages. Whilst some businesses get it, we know most never will. But this fact is to your considerable advantage if you build and run your own sites Relevant Traffic Is Everything We know that a site without traffic is like a billboard in the desert. If no one sees it, it doesn’t matter how pretty it is, it is useless. A site without relevant traffic is a cost, not a benefit. Traffic that “just passes through” presents a major opportunity cost. What did that traffic really want to see, and why aren’t I providing it? Someone else will be. We know that search is the ultimate internet marketing research tool. Search is marketing nirvana. Visitors tell us what they want, using a keyword query, and all we need to do is match that query up with our site. Most people, outside search, still do not get this. But we do. Integrating SEO At Every Step One thing some SEOs may not get is that SEO needs is an integral part of business strategy. SEO is not just about positioning a site in the search rankings, it’s about positioning a site in the market. For example, it is pointless getting a #1 ranking for “cheap t-shirts” if a site sells designer t-shirts. Whilst this may result in a few rouge purchases, the site will constantly lose out to sites that offer cheap t-shirts. Because the visitors will reformulate their search queries until they find the service that is most relevant to them. From a business point of view, it may be better to run two sites - one offering cheap t-shirts, and one offering designer shirts. That’s what being relevant really means. Being relevant to a target market. An SEO strategy should look like this: Identify the target market Conduct a competitive analysis Create a business plan that shows how you will compete in that market Research keywords Create a brand identity related to those keyword terms Create a search-friendly site Get links SEO flows naturally out of the demands of the target market. The visitors tell us what they want. We look to see if anyone else is providing it. If they are, could we do better ? We create a basic plan showing how we will supply the need, and how much money we’ll make, after costs, if we succeed. We develop a strategy, as opposed to tactics . We investigate the many ways people phrase queries . We create a “language” for our site copy, and brand, that includes those queries, and addresses the intent behind them. We build a crawlable, well-ordered site and then we tell the world about it. We hope the world will talk about it, the send some attention our way . SEO Is Ongoing Just as business strategy is something we must do each day, so too is SEO. Integrate SEO into all you do. Even sending out a bill is an opportunity to ask someone to engage with your site. And hopefully link to it. Ask your friends, associates, suppliers and customers to link to you. Do the same for them. Create a personal link network of like-minded people and grow that network wider and wider. Think of it as a circle of trust. Your keyword referral stats are pure gold. Find the keyword terms people have used to find you. Use them as ideas for new page topics. Integrate their language into your copy. Repeat. Grow organically based on the demands of visitors. It’s just a case of “listening” to them. And responding with new pages. Join related clubs, forums and organisations. Find out the top sites in your niche that accept advertising, and advertise on them. Write articles for them. Contribute to discussions. Go to wherever your potential visitors are. Every page should link to another page on your site in a strategic, meaningful way. Think of any page you write as the start of a funnel that leads to other areas of your site. You want to subtly direct people to the page or action where they’ll engage with you. For this to work, you need to have a clear business directive in mind. What is it you want people to do? Every page is a step leading to that point. Be newsworthy. And remarkable. What do you do that’s really interesting? Social media thrives on, and rewards, the different - the thing that is new. Same-ness - not so much. Position for both business and rankings

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SEO Flows Through Everything

Ever wondered how to price your SEO services? Your products? Have you set your prices at a point where you can get the best possible returns? Pricing seems simple, but there’s a bit of an art to getting it right. In this article we’ll take a look at different ways to price, a few strategies to use, and why you might want to avoid charging everyone the same price. Why Pricing Strategy Matters Obviously, if we get our pricing wrong, we’ll miss out on business. In order to increase profits, we could devise new services and products. However, by adjusting our existing pricing strategy on goods or services we already provide, we can squeeze out extra revenue with little effort. To get greater returns from pricing, companies typically find ways to charge different prices to different customers. Cost Plus Pricing Cost-plus pricing is a common pricing method. Pricing of a good or service is determined by working out the total production cost, then add a profit margin. There’s nothing wrong with this method - cost-plus pricing is widely used - however it does present a few problems. One problem is that cost-plus pricing doesn’t take into account the role of competitors. If we offer a SEO service at $15,000, arrived at by the cost-plus method, but our competitors offer the same service for $10,000 then our pricing clearly won’t work. We must price in accordance with the market. Cost-plus pricing doesn’t take into account fluctuating demand. If demand for your products/services suddenly goes through the roof - say because you’ve been interviewed on nationwide television - they become scarce, and price should rise to reflect this scarcity. Another problem is that it doesn’t take value, as perceived by the customer, into account. Imagine that you’ve created a widget that enables a machine to work at twice the output it did before. The value to the customer is considerable, as they can now double their output with little extra investment. The total cost of building the widget may be low. Cost-plus pricing would typically underprice such a widget. Value based pricing would charge in line with the total value it creates for the customer i.e. the increased value of their output. In terms of SEO, are you charging enough for your services if you charge a few thousand dollars, whilst your clients make millions? Thinking of pricing in terms of value provided to your customer is a key to increasing profits. Let’s look at a method to accurately calculate a price for your goods or services. Pricing Calculator In the The Art Of Pricing , you can find the following method for setting prices. Step One: Price & Availability Of Substitutes Are there any substitutes for your product? If so, how are they priced? Step 2: Characteristics Relative to Competitors What features do you offer that your competitors do not, and vice versa? Do you customers value these features enough to pay extra for them? Do customers value other characteristics, such as brand, established service levels, reputation, locality etc? Step 3: Income Can your customers afford your prices? Are they less able to afford your prices than they once were? Are there times of the year they can afford it, and other times where their purchasing power is constrained? Step 4. Price/Strength Of Demand For Related Products What are the associated overheads of owning your product? For example, if you sold cars, there are other costs involved that make up the total cost of ownership, including running costs, insurance and maintenance. Step 5 - Market Environment Has your product suddenly become high profile? Has demand increased/decreased considerably in a short period of time? This type of approach takes into account a number of variables when setting price, namely affordability, value, market conditions, and competition. Some Issues With Value Pricing Pricing, without taking into account overall business strategy, is a mistake. For example, say there is a natural disaster where people lose their homes. A hotel may jack up the rates to ridiculous levels because it knows demand will surge, however the long-term value of the brand may be damaged if the hotel gets a reputation for price gouging. Some companies may want to price at a level that gains them clients, but not revenue. For example, in order to build a reputation in the market, new SEO agencies sometimes provide services at a discount, or free, in order to get a few big name clients on their books. Pricing Tricks Let’s take a look at a few common pricing methods in practical terms. The Law Of Three: If you go into a shop to buy a washing machine, you’ll likely be faced with a range of models. Nothing odd about this, of course. The shop is trying to cover all bases. However, there is often something more subtle going on. Most people will buy middle of the range. The middle of the range feels “safest”. So, a shop will often have a ludicrously expensive model, and a very cheap model. The actual model they want to sell you is the priced in the middle of those two extremes. If the shop didn’t offer a ridiculously expensive model as a basis for comparison, the middle option becomes the expensive option, and you’re more likely to set your sights lower. When you offer SEO services, try doing the same. Offer a bells and whilstles version that is highly priced, a mid option, and a cheap option. Typically, your customers will select the middle option. If you only offer two options, people typically choose the cheapest. Auctions: Perhaps not applicable to SEO, but if you’re selling products, the auction system can be a great way to achieve better prices. Entire books have been written about the psychological effects of auctions, but it all boils down to the fact that people place different values on products based on their own needs. Those who want the product the most, pay the most. Versioning - Offer slightly different versions of the same thing. See Apple and their iPad pricing. The cost of production of each model is probably near identical across the range, but by offering different versions, they can figure out who is prepared to pay more. Versioning can often be more extreme when setting a wide price range. Conferences tend to offer coupons off retail price for early attendees, but so long as the full price has been seen publicly by some folks, this lends a perception of value that can be used in subsequent marketing & packaging. Some companies might run an in-person conference which charges thousands of dollars, and then afterwards, sell you a download version of it for a few hundred dollars, all the while anchoring on the “fact” that you just saved $1,000+ with your purchase. The “crucial” networking & intimacy benefits which were used to promote the in-person event soon disappear and the concepts of value and convenience (instant download, no travel required, etc.) are brought to the fore. Segmented Pricing - Perhaps your buyers can’t pay the entire cost up front, but they can buy using other arrangements, like a monthly fee. Some clients might prefer bundle offers where everything is done for them, whilst others want to mix and match parts of your service. Offer different options so your client can fit their budget to your offering. Differential Pricing - Offering coupons can grab those buyers who are very price sensitive, or looking to buy only if they perceive a genuine bargain. Your other customers won’t bother with coupons, so you can successfully run two different pricing strategies, one discount and one full price, by using coupons. Markdowns - Obvious, but powerful. You advertise the usual price, but a line through it, and offer it at a reduced price. What’s not so obvious is when markdowns should be used. Markdowns don’t work so well on luxury items, as this can compromise their exclusivity value. Not much point owning a high-end garment is everyone has one. Notice that luxury items either don’t display their price, or, if they do, its typically stated in rounded figures i.e. $1500. Budget items price in dollars and cents i.e. $39.95 or slightly under the next increment i.e. $99 as opposed to $100. The format of the price signals exclusivity, or lack thereof. But Is This Fair? Offering one price to one group, and another price to others may seem unfair. This is something you’ll need to weigh up for yourself. However, keep in mind that if the differing price points reflect different levels of value, then the customer is deciding what they value most. If they want the full service, they should expect to pay full-service prices. If they want the lowest price, they may be prepared to wait or sacrifice some features. The customer decides what they value, and votes with their cash. And they can always say “no”

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How To Price

by Stoney deGeyter Warning: This is a very complicated and math heavy post. It is best read slowly in small doses to ensure you can fully digest it all. I will also point out that I’m not a math or analytics expert so what you get here is my way of doing things which is probably far removed from the official Geek’s Guide to Web Analtyics and PPC Tracking. In Part 1 of this 2-part series I guided you through some basic calculations that help you figure how to ensure that your PPC campaign is profitable by knowing your cost per conversion ceiling. The calculations I went through were very basic and provides a good starting place for any new or inexperienced PPC campaign manager. In this post I’m going to take you a bit deeper into some much more complex calculations in an attempt to get more accurate cost per conversion data. The cost per conversion ceiling found when doing the calculations in Part 1 will actually be much lower than the final calculations we’ll produce here. Using the figures from the beginners post will leave you less room to maneuver on campaigns where costs are high and profiting is seemingly more difficult. We’ll fine tune things quite a bit here in order to give you more wiggle room while ensuring your PPC efforts remain profitable in the long run. Every customer has a value beyond the first sale Every sale you make is worth more than the cost of the products or services charged in that one transaction. You’ve heard it said it costs more to find a customer than to keep a customer. PPC and SEO is all about finding new customers. But if you run the business right, you should be going out of your way to keep the customers coming back time and time again. The question is, from now until death, how many customers come back for repeat orders? How often and how much do they spend? Every industry is different. Where Amazon likely has customers come back monthly, weekly, and some even daily; car dealership only gets customers back every few years if at all. If your average customer comes back five times over the course of their life and spends an equal amount of money, then each customer has a lifetime value of five. Technically, that means that if the cost of acquiring a customer (the PPC’s cost per conversion) is four times the profit you make on a single sale, you’ll still make a profit on that fifth sale. That’s putting it simplistically. Different products may make different impacts on the visitor. Higher-end stuff may bring customers back less because there is no immediate need to replace it, but also brings back loyal customers that are apt to make more purchases. Lower-end stuff may need to be replaced more frequently, but also prone to disappoint your customers, making it less likely to produce repeat sales. Finding the lifetime value of a customer isn’t easy to predict. If you have access to all your sales data, then you can run the figures to get the bottom line. We’ll continue to use our fictitious company Sexy Doodads, Inc, to provide our data. In Part I we found out how many customers purchased each product within the last 12 months. So now we look into the books to find out how many actual customers Sexy Doodads, Inc has for each product. This is what the books tell us: To find the value of each customer within a one-year time frame you take the total number of sales for any product group and divide that by the total number of customers. From Part I we know the total number of sales for each Sexy Doodads, Inc. product group so we’ll plug that information into our calculations here. This tells us how many purchases each customer makes from within the same product group in an average year. By adding up all the sales for each product group and all the customers, Sexy Doodads, Inc. finds that they received a total of 17,500 sales from 15,500 customers. That means 2,000 customers bought more than a single products from within the same product group. These are great figures to have if each customer only buys from a single product group. But that’s not always the case. What we don’t yet know is how many customers might have purchased multiple products across differing product groups; perhaps on a subsequent visit. So now we look at total orders and total customers over the same one-year. If Sexy Doodads, Inc. looks at their sales figures they can find out how many total unique customers they had in the past year. Lets say they had only 5,000 truly unique customers. (People like to have a lot of doodads!) Now we’ll do the same we did above to find the yearly customer value of all products: This tells us how many purchases total each customer makes in an average year. Since products are sold one at a time and the service is set up on a yearly plan, we’ll need to break the service portion out from the rest of the calculations here and work on those later. Using the Product Customer Value for all products that assumes that those that come in on the higher profit products will continue to produce a higher profit. Similarly, it assumes that those that come in on lower profit always buy lower profit. To create a better profit balance I would average the Product Customer Value for each product with the PCV for all products. We now have a decent yearly customer value to work with. Those small differences in Yearly Customer Value between products may not seem like a much, but when you’re dealing with large scale they do add up. Also keep in mind that our numbers are fictitious, you may find larger differences in your own business. The next step is to factor in how many years a customer remains faithful to your brand and continues to make purchases. If you have the data you can perform the above calculations using three, five or ten year period instead of just one year. Ultimately that will be less work, but in case you don’t have that kind of data we’ll use the one-year data and calculate for annual customer loss. Sexy Doodads, Inc. knows that only about 50% of it’s customers this year will purchase a product next year. Continuing at that rate of loss; only 25% will purchase a product in the third year, 12.5 for a fourth year and 6.25 for a fifth year. We’ll assume that six years after the first purchase all customers have regrettably forgotten about Sexy Doodads, inc. Sad really. If we add up those percentages together we get a Lifetime Customer Value for all product. To get the Lifetime Customer Value of each product we multiply the Yearly Customer Value of each product with the Lifetime Customer Value of all products. We know know the lifetime value of any given customer, on average, for each product group. As noted above, these figures will vary from industry to industry based on expected repeat sales. We’ll work those figures into some additional calculations later, but lets go back a bit and get caught up with the Doodad Repair Service. Sexy Doodad, Inc. sells their Doodad installation and warranty service on a three-year contract. Purchasers pay each year for the service for three years and then they are done. Since the purchase of the doodad installation service is entirely contingent of having already purchased a Doodad from Sexy Doodads, Inc, we don’t have to make any considerations as to how many other products the customer might also purchase. This means the product customer value is also the yearly customer value. But we do have to figure the lifetime customer value, which, in this case is pretty simple. The purchaser makes three payments of equal value for three years. So we know that the Lifetime Customer Average is 3. We multiply that time the yearly customer value as we did above which gives us the Lifetime Customer Value. So now we have the Lifetime Customer Value for all of Sexy Doodads, Inc. products and services: You may be wondering why it’s important to do all that complicated math. It all comes down to profit. Knowing the lifetime customer value allows you, if necessary, to make your first sale at a loss knowing that you’ll make a profit with subsequent purchases. Clearly the goal is not just to break even or take a loss on any sale, but you need to have solid figures so you know where your true profit line is. I should also note that in some competitive industries, it will take some time to get your PPC campaigns to a profitable level. If you have a better idea of your profit line then you will be more likely to give your PPC campaign a chance to succeed. If you do so much as break even on the first customer that comes via PPC, every additional purchase they make will be all profit. We want to use this information to help establish our baseline metrics. How much can you spend and still profit? The next step is to figure out how much you can spend on your PPC ad campaigns and make sure you are making–not losing–money. If you use the profit values we found in part one of this post you’ll stay well within your profitable zone. But again, in competitive industries, that’s not always easy. So we use the results from above to give you a bit more wiggle room in truly figuring out your profitability zone. To do this you need to multiply the profit from each product (see Part I) by the lifetime customer value. This will tell us how much we might be able to spend on each sale and still make a profit. The online customer profit we calculated here can replace the profit that we calculated in Part I as this is far more accurate. You can see how when attempting to adjust your PPC campaigns to stay in that zone of profitability you have a lot more room to maneuver. But we’re not quite done. To make these figures even more accurate you have to factor in how many sales come over the phone verses through the online forms on the web. This is extremely important. Tracking web clicks and conversions only covers part of your sales. Many people may find you on the web but the conversion happens over the phone. If you don’t account for these then you are leaving out important metrics from your profit calculations. If you have a call and conversion tracking in place then then you can easily tie these into your PPC metrics and run the math. If not, then you need to estimate how many sales are made via the phone. Sexy Doodads, Inc. takes about 35% of their orders over the phone. They figure that roughly 15% of those can be tied directly to their PPC efforts. It’s a bit of guess work determined via customer conversations, but its as accurate as Sexy Doodads, Inc. can get for now. We need to add in that 15% to the online profit metric we calculated above. If you want to get really fancy you can figure your percentage of offline sales for each product group. It takes a bit more offline tracking to do that but it will give you more accurate figures on a product by product level. Remember, it costs more to get a customer than it does to keep a customer. You can increase your profits significantly if you can get each of your PPC campaigns into a profitable range then place some additional efforts on customer retention. If Sexy Doodads, Inc can improve their retention from 50% a year to 75% (only 25% cutting out each year) then the total customer profit of each of their products goes up significantly. Finding the sweet spot of profitability Not every click results in a sale. Too many people managing PPC campaigns focus on the cost per click and determine that their campaigns either are or are not profitable. This is a mistake. Using the tools in your analytics package you can figure out your cost per conversion on a product by product basis. If your cost per conversion falls below the total customer profit, you’re going in the red. The total customer profit is your break even point several years down the line. Ideally you want your cost per conversion to be down 25-75% from the total customer profit. This gives you a lot of room to maneuver as you try to get your PPC campaigns at maximum performance. Taking the total lifetime profit of each product and reducing it by 75% and 25% we now have a profitability range in which to maintain the cost per conversion of each product in the PPC campaign. Your sweet spot will likely be right in the middle of those. If you go too low on your cost/conversion you’ll be losing out on potential sales. Increasing your cost/conversion will lower profits per sale but it’ll bring in more sales thereby increasing your profits overall. As long as you keep your cost per conversion in that range of profitability, it doesn’t matter how much you’re paying per click… or how much you’re spending on PPC. Each click and every dollar spent is more profit in your pocket. Be sure and visit our small business news site.

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How to Optimize Your PPC Campaign to Profit From Every Click (Advanced)

by Stoney deGeyter Google, Yahoo and Bing have made setting up pay-per-click (PPC) campaigns fairly easy and painless. Within hours you can have your ads up and running, and delivering traffic to your website for a small fee per click. Unfortunately, the ease in which a campaign can be set up often convinces business owners that they can throw up some PPC ads and the money will start pouring in. I’ve talked to many businesses that think PPC doesn’t work because they tried it once and never made any money. It’s not that PPC doesn’t work, it’s that the campaigns were not set up and managed properly. All too often a PPC campaign is created by the business owner but left to run with little or no management, supervision or oversight. Even a properly (or professionally) set up campaign needs constant oversight. Proper set-up and management of your PPC campaigns is vitally important to ensure you have a profitable and high ROI PPC campaign . Without effective bid management and ongoing testing of ads and landing pages the campaign will soon be nothing more than an expensive traffic delivery method. As time passes, bid clicks will rise, positioning of ads will fall, landing pages won’t be as targeted and your cost per conversion will increase. Your PPC campaign may continue to deliver both traffic and sales, but the cost of those sales may be outside of your zone of profitability. Most PPC campaign managers don’t truly know how much the business can afford to pay on a per-click basis. Worse, they don’t manage their overall cost per conversion being delivered. Instead, they look at the cost as a whole, and try to make sure every $100 spent in advertising brings back at least $100 plus the cost of the product or service sold. This is a break even strategy at best–and often times a losing strategy. Finding the cost per conversion ceiling For most businesses, the “cost” of a PPC campaign cannot be taken as a whole. Within each product and service category offered, there is a varying degree of profit that must be factored into the overall cost of the campaign. Each of these profit levels must be broken down and/or grouped together in order to ensure that the profitability and success of the campaign can be properly tracked. When you don’t consider each product or service separately, you’ll likely end up using the profits in one area to pay for a loss in another. When every area is considered separately, you can ensure that each and every area is profitable in its own right. To manage a PPC campaign successfully you must know your cost per conversion ceiling for each product or service group you offer. With proper tracking you can make sure that every click, regardless of how much it costs, is making–and not costing you–money. To help you understand this we’ll work our way through a PPC campaign for a fictional company called Sexy Doodads, Inc. I’ll use round numbers in order to make this as painless as possible. Sexy Doodads, Inc. Sexy Doodads, Inc. manufactures and sells doodads that they manufacture themselves and also from other manufacturers. The profit margin on doodads they manufacture is greater than those they sell from other manufacturers. Their doodads come in a variety of flavors: red, blue, green, luxury, etc. The color of the doodads doesn’t effect the price much, but luxury doodads are a bit more expensive. SexyDoodads, Inc. also provides a doodad installation/repair/warranty service. While leads come in online through the PPC account the repair service can only be sold over the phone due to customization requirements. The tools you use to manage your PPC accounts will only give you the cost of conversion to the lead, however not every lead converts to a sale. Therefore we’ll need to incorporate some offline figures in order to figure out the true cost per conversion on these. More on that later. I’ll walk you through all of the calculations here, but first we want to separate our doodads into groups based on similarity in terms of costs and profits. For our purposes we’ll break them into these five groups, each requiring it’s own set of calculations: Here we have two brands: X and Y. We can say that brand X is manufacturers by Sexy Doodads, Inc. and Brand Y is all other manufacturers. We could also create a Brand A, B, C, etc. one for each manufacturer if profits and price vary dramatically enough, but there is no need to do that for this example. We also have a luxury line, both for Brands X and Y. The Luxury sell for a bit more and have better profits which is why they need their own group. Finally, we have a grouping for the Doodad repair service which isn’t a product at all. While covering all five different product groups here can make this post a bit complex to follow, I wanted to make sure you can see how small differences in sales and profit margins can make a big difference in profitability. How much is your average sale? If you pay close attention to your business accounting you may already know the answer to the question posed above. Unfortunately, most businesses don’t. While it may not be an important metric when looking at the profitability of your business, it is an important metric in ensuring your PPC campaigns remain profitable . This is our starting point for effective PPC campaign management. Last year Sexy Doodads, Inc. sold: They have also kept track of how many individual products sold within each group: Since there are a number of options within each group the pricing also varies a small amount. You first want to figure out the average sale amount for any product or service group. For each product group simply take the total amount of income received and divide by the total number of sales. For Sexy Doodads, Inc. the average sale amount of each item per item group is as follows: Remember, we are using round numbers here so these calculations look like something you could simply guess at. But keep in mind most companies sell similar products at different price points. There might be a difference from a few cents to several dollars. We simply created groups based on similar sales price and profit margins. How much is your profit? Now that we have an average sale per product, we have to factor in the actual profit margin of each product group in order to make sure our PPC campaigns are profitable. It does you no good to pay $8 to sell a product that costs $5 to manufacture . Figuring out the profit will give us the maximum cost per conversion we need in order to ensure you are making money, not losing it. To ensure a company makes a profit they usually add a markup cost on the products they sell. Since services don’t have a “markup” in the same way products we’ll consider the markup added to the known cost of installation and repair time. Here is the markup Sexy Doodads, Inc. adds to the cost of the products they sell: Markup, however, is not synonymous with profit margin. It is merely the percentage that the price is increased from the cost to purchase or manufacture it yourselves in order to cover additional costs such as shipping, handling, miscellaneous expenses, and (hopefully) a profit. Since the markup isn’t usually 100% profit on top of all other expenses, I generally adjust it down by 5-15 percentage points to try to create a best guesstimate of the profit margin for each product. Accordingly, Sexy Doodad, Inc.’s estimated profit margins are as follows: To figure out the profit of each product group, you need to multiply the average sale amount found earlier by estimated profit margin: Additional Steps for Leads PPC tracking mechanisms stop once the online “conversion” is made. This might be a sale that is completed, a form that is submitted, or even an information sheet that is downloaded. When dealing with leads, because the sale is handled offline you have to factor in some additional components to ensure you truly find your maximum cost per conversion ceiling. The profit per sale noted above is accurate for leads only if you converted 100% of your leads. Generally that’s not the case. You have to factor in your actual conversion rate of the leads that you get. Let’s say you close 50% of the leads that come from the PPC campaign. You have to multiply that percentage by the “profit” you get from the leads: Maximum Cost Per Conversion The profit figures above tell you the absolute maximum cost per conversion ceiling for each product group. This is your break even point. If you keep your cost per conversion (not cost per click!) under these amounts then you will never lose money on PPC. If your cost per conversion is higher then those figures then you are losing money. Ideally you want to find the sweet spot where you are as far under that ceiling as possible without cutting into your ability to drive traffic and sales. One other point to make about these figures: Now that you can clearly see which product groups give you the best profits, you want to focus the majority of your PPC efforts (and spending) on those product groups. Much money is wasted in PPC by spending money on the groups that get the most clicks instead of those that get the most profit. Sometimes they are one in the same, but not always. By directing your funds to the higher profit campaigns you can make sure you get more profit for every dollar spent! The information here is a good starting point for most businesses. The calculations provided are pretty easy to work out and will give you a strong base of reference for optimizing your PPC campaign. But many industries in competitive fields may find it difficult to tweak their campaigns enough to get their cost per conversion under the profit figures calculated here. As much as I want to say that these figures represent your maximum cost per conversion, they don’t. There is additional data that can be factored in such as product re-purchase rates, customer faithfulness and retention, and more. Factoring in these additional components will give you a little more leeway in getting your PPC campaigns profitable while bringing in as much converting traffic as possible without going over budget. I’ll address these additional components in the advanced version of this post which picks up where this one leaves off. The goal is to find that absolute sweet spot of profitability to ensure you get the most out of your PPC campaign. Be sure and visit our small business news site.

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How to Optimize Your PPC Campaign to Profit From Every Click (For Beginners)