How Much Does SEM Cost?

Mar 19 2015

sem

How Much Does SEM Cost?

Special thanks to Danny Ortiz, Director of SEO/SEM for NJ Advance Media, for contributing his knowledge and expertise to this post. NJ Advance Media provides content, marketing and advertising services for NJ.com and The Star Ledger.

This is always the first question we’re asked when we broach the subject of a search engine marketing (SEM) campaign.

Most people aren’t thrilled with the answer because it’s not cut and dry. You can’t just Google the cost of SEM and find a concrete number.

Truth be told, the cost of SEM, or a pay-per-click (PPC) campaign, depends on a lot of factors, and anyone who quotes you a number without first doing research is giving you an educated guess at best.

We have to research keywords to determine which ones are going to bring the highest engagement, as well as keyword volume – on a historical basis, how many people were searching for a specific term.

The goal is get at least 50 percent impression share. In other words, if 100 people search for the keyword you’re targeting, your ad should appear at least 50 times.

We also have to research cost-per-click (CPC). Keep in mind that Google advertising is auction-based. You basically tell Google how much you’re willing to pay for a certain placement.

For example, if your bid of $5 for the first position on the page is the highest, and the next highest bid is $4, your CPC is $4. A CPC of $4 means the cost to deliver a lead to your website or landing page is $4.

However, that winning bid may not hold up forever. You can be outbid. That’s why we constantly optimize your bidding strategy in real-time through an automated platform.

CPC is determined by the amount of competition for a keyword. For example, the national average CPC for plumbing keywords is $5-$8. In New Jersey, plumbing keywords typically go for more than $25 because the competition is so high. Certain companies bid extremely high because they want to own a certain position and they drive up the price.

Ultimately, the cost of SEM depends on keyword competition, your geographic targeting, the amount of available traffic, and how much impression share you want to own.

The cost to own 50 percent impression share for a certain keyword in a certain target area might be $5,000 per month. That doesn’t mean you can’t run an SEM campaign if you don’t have a $5,000 budget.

You can lower your monthly budget significantly by shrinking your geographic target area and settling for a smaller impression share, and you don’t have to own the top spot to run a successful campaign.

Suppose the CPC for the first position is $15 and the third position is $5. If you can get three times as many clicks at the third position, and you’re getting conversions, you don’t need the first position. Just bid enough to guarantee the third position because it’s delivering results.

There’s one more factor to consider – quality score.

If you Google deems your campaign and website deliver a better user experience in terms of ad relevance, original content, high quality design and other factors, Google will cut you a break on what you’re paying.

In other words, SEM isn’t just about the highest bid. By valuing the quality of the user experience you deliver, Google prevents unscrupulous advertisers from buying their way to top of search even though their ads and website are lousy.

The great thing about SEM is that everything gets tied back to ROI. Everything is trackable.

Depending on how sophisticated your website is and how much access you provide to your backend, an expert like Danny at NJ Advance Media can tie dollar amounts to every conversion.

It’s relatively with an e-commerce site because the user is buying something for a fixed price. But you can also use Google Analytics to tie a dollar amount to every conversion, whether a user picks up the phone, fills out a form or submits an email address.

Although this is a high-level overview of SEM pricing, we realize it can be overwhelming. That’s why it helps to hire someone to develop an SEM strategy and manage your campaign. To schedule a free consultation, call 732-229-7100 or email mike@shorecreativegroup.com.

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