What Do You Pay?

While many search engines don't charge for inclusion in their database of search results, it is a tempting business model that more and more search engines are moving towards. Paid listings take several forms:

• Paid Inclusion: A payment to be included in the overall search database of indexed sites.
• Preferential Paid Inclusion: A payment to be at the top of the list of search results.
• Advertising: Buying advertising space on the search results page, with the appearance of your ad determined by the search term used.

How Do You Pay?

The way these paid listings are charged takes 2 forms:

• Subscription: You pay a monthly, yearly or one-off fee for your site (or a particular page from your site) to be included in the search results database.
• Pay-Per-Click: You pay nothing (or a small setup fee) up front, then a charge is payable each time someone clicks on your listing in the search results.

Depending on the search engine, you either pay the applicable Pay-Per-Click (PPC) rate that has been pre-set by the search engine themselves, or you specify particular search terms that you wish to rank for and enter into a bidding war with other people who also want profile under those terms. The highest bidder gets the top listing in the search results, and everyone else is ranked based on how much they are willing to pay.

PPC rates can be as low as $0.02 per click or up to $20.00 per click (and beyond) depending upon the popularity of the keyword sought, and how high up the listings you wish to be. It's best to assume that you will be paying US$0.20 to US$2.00 per click.

For subscription submissions it's important to differentiate between those that charge per site and those charge per page. Paying for a listing on a "per site" basis implies that over time that search engine will investigate other pages on your site and will progressively list all of them in its search database. If the paid listing is described specifically as being on a "per page" basis then no other pages on your site will be listed unless you specifically pay for their inclusion as well.

Who Do You Pay?

Site index databases are maintained by third party providers as well as the search engines themselves.

Maintaining a search results database is becoming an increasingly complicated and technically challenging task and many search engines are choosing to use databases from ousourced third party providers like Inktomi. Inktomi is not a search engines in its own right, it just provides searchable content for search engines to use.

The search engines themselves are also leasing their own "in-house" search index content to other search engines. No search engine indexes every page on the internet (and most of them are well below 10-15% of the internet) and not every page or site is listed with every search engine.

Since each database is different, by combining its own database with those of other search engines, a search engine is able to increase its spread of content to provide a better search experience for its users.

Because of this, paying for a listing with one search engine will invariably lead to your listing appearing in other "related" search engines, and its important to be aware of these inter-relationships when buying paid listings in order to maximise your spread while minimising your expenditure. Why pay $49.95 for a listing directly with Excite when a $30 listing with AskJeeves also includes a listing with Excite?

The idea is to get into a database that is as widely distributed as possible for the cost involved.

So, who do you pay? Usually the maintainer of the database you wish to be included in - whether it be a third party provider or one of the search engines themselves - but resellers are also appointed so you might be dealing with one of them.

What Paid Listing Programs Are Available?

More than I can list here(!), but these are the more popular ones:

• Google - Adwords: Pay-Per-Click advertsing based on keyword bidding. The ads appear in the right hand sidebar of the Google results pages and the highest bidder has the top ad spot. Google Adwords ads are also available for distribution to other sites through the Google AdSense program.
• LookSmart - LookListings: Non-preferential pay-per-click (inclusion listings) with results appearing in main body of search results below sponsored listings, and preferential pay-per-click (keyword listings) with listings appearing above LookListings in sponsored search results. The inclusion listings are charged at $0.15 per click, while keyword listings are based on a keyword bidding process. Listings are also shown on SearchMSN, Road Runner, CNET, InfoSpace, Dogpile, Excite, and Mamma. (More info..)
• Overture: Overture has recently been bought by Yahoo! and the original Overture SiteMatch program has been merged with other Yahoo! offerings into the broader Yahoo! Search Marketing program. (More info..)
• Yahoo! Search Submit: Offers pay-per-click at either $0.15 or $0.30 each depending on the keyword category you choose, and is only for inclusion in general search results. This replaces the old "flat fee" Yahoo! registration charge. (More info..)
• Yahoo! Sponsored Search: Pay-per-click by keyword bidding that places your listing within the sponsored results at the top of the page. (More info..)
• Yahoo! Special Interest: Yahoo! have other offerings for inclusion in either Yahoo! Shopping or Yahoo! Travel. Most are fixed price pay-per-click. For example an accommodation property can be listed in Yahoo! Travel for US$0.47 per click as part of the Yahoo! Travel Submit program. (More info..)

There are also several smaller players who have been consistently gaining market share over the past few years and aren't affilliated with any of the larger programs shown above. Their paid listing offerings represent reasonable value for money considering their user base.

Customer Acquisition Costs

With pay-per-click listings your budget can quickly blow out if you underestimate the number of visitors you receive through these paid links. Even if you're only paying US$0.15 per clickthrough, if you attract 1000 new visitors per month that's going to cost you US$150 per month!

At this stage we need to look at the concept of "customer acquisition cost". Your site stats will tell you how many visitors your site takes each month and your accounting software will tell you how many sales you make each month. If you take 1000 visitors per month and make 40 sales per month, then, on average, you need 25 visitors to make a sale. If you are paying US$0.15 per visitor then the cost of acquiring enough customers to make one sale is US$3.75 (25 x $0.15).

Do you have the margin to absorb an oncost of $3.75 per sale? Can you improve your site, or your back office procedures, to increase your conversion rate and reduce this cost per sale?

As a business you already have a customer acquisition cost - how much it costs you to run your business each year divided by the number of sales you make - and this internet component should be taken in the context of your overall business structure, and used to put the amount you're willing to spend on a keyword bid into perspective.

You should also assess what your competitors are in a position to pay based on their overall business structure, and decide who you can and can't compete with when it comes down to a bidding war.

For example, the online travel industry in the Whitsundays (just down the coast from Cairns) is dominated by unlicenced tour desks operating web sites out of the third bedroom of their house. They don't have shop fronts to pay rent on, they don't have wages to pay, and they don't have the expenses of licencing and statutory charges that legitimate travel agents are required to pay. The customer acqusition costs associated with their "real world" business infrastructure are ridiculously low giving them the opportunity to pay $15.00 to $20.00 per clickthrough for Google AdWords and Overture listings. The local legitimate travel agents haven't got a hope of competing against them bidding for keywords at this level.

Think for a moment about how much you are willing to pay for a sale, and divide this cost by the number of visitors you need, on average, to make a sale - that is your bid rate budget. This amount will determine how much you bid for a particular keyword, and which keywords you bid on. Remember that the "big" keywords for your product or region will probably be expensive, while terms that more closely relate to you and your product might be a significantly cheaper buy.

Also consider the merit (or otherwise) of buying the top ranking for a particular keyword. Why spend $1.50 per click to get #1 when spending $0.25 will get you #5, and you will still be in the hunt. You might not get as many visitors as the site at #1, but your customers are costing you 1/6th of the amount of theirs, and you are still clearly visible in the top 10.

Strategy Tip: Most pay-per-click programs allow you the option of setting a monthly (or daily) spend limit and once your program reaches its limit your paid listing or ad is turned off. If the keywords you need to bid on are too expensive for you to take on full-time then try a part time approach with a budget set at a lower level that displays your listing for some of the time. You might not be able to afford $0.75 per click long-term, but if you can afford $100 per month then being ranked well amongst the paid listings for some of the time is better than not being there at all.

Next Step?

The most important part of embarking on a paid listing placement program of your own is to have a plan to begin with, and the best place to start your plan is with a budget. Let's roll a few numbers around:

For the following I'm assuming that your site is taking 1000 visitors per month. If you're doing more or less, then multiply or divide the cost accordingly.

• Yahoo! Sponsored Search is a very pervasive program that gives you exposure basically everywhere except Google and Looksmart. This one could well account for up to 35% of your site traffic so you will be paying either US$0.30 or US$0.60 for each of up to 350 visitors per month - so its a distinct possibility that it will cost US$100-$US$200 per month.
• Listing with Yahoo! Content Match provides high profile "sponsored" placement on many of the top search engines, as well as external sites, and should be seen as premium option for those that can afford it. For reasonably specific keywords you should expect to pay US$0.30 per click for a respectable listing, and up to US$1.00 (or more) for a top listing. For big keywords the sky's the limit and paying over US$20.00 per click is not uncommon. Assume 15% of your visitors will come from this source so 150 visitors per month @ US$0.30 per visitor - US$45.00 per month (minimum!).
• Google AdWords have a similar bidding profile to Yahoo! Sponsored Search so cost expectations would be the same. The AdSense program distributes AdWords ads to private and commercial sites giving a broader spread of opportunities. You will probably generate more traffic from AdWords than from Overture so assume a minimum of US$50.00 per month.

Taking these 3 listings and would give a good spread of search engines for US$200 - US$300 per month - a fairly reasonable price when you consider the number of people you will be in contact with, and the cost of conventional advertising that provides a similar spread.

Bear in mind that these figures are based on a site taking 1000 visitors per month, and that bid prices may be higher (or lower) depending upon the keywords you bid on, and the ranking position that you're happy with.

Web Site Optimisation

I've alluded to it above, but I'll mention it again - non-preferential or pay-for-inclusion programs are simply to have your site included in the search database and have it returned in the normal run of search results. It does not gaurantee anything - you will only appear within the search engine results in relation to how relevant your site is to that search term.

If your site is not optimised it will not appear in the top results, in the same way that a non-optimised site will languish at the tail-end of the search engine results in any of the free sites.

Preferential inclusion or sponsored listings (like Google AdWords) work differently by essentially putting an "ad" for your site in a highly visible place, so search engine optimisation is not as important in this case, however to maximise your returns you must have a site that is responsive to the search terms that you think your customers will be typing in. For that reason you will need to be enrolled in our Search Engine Management Program.

What Can We Do?

If you would like us to manage your paid listings, we also offer an extended Paid Listing Management Program where we can:

• Advise you on your paid listing options and assist with choosing the right mix for you
• Organise your registrations with the programs of your choice including submission of keyword lists and descriptive text
• Optimise your site for the programs that you choose
• Assist you with keyword selection and keyword bidding for pay-per-click programs
• Monitor the performance of your paid listing programs and fine-tune your keyword bidding profile

Clearly there is a fair bit to do, both initially and ongoing, and the fees that we charge reflect the amount of work involved. Even for us, simply figuring out what needs to be done and discussing it with you can take 2-3 hours, with another 2-3 hours (or more) needed to then put those decisions into play. Managing and monitoring the results on a monthly basis is another few hours of work each month. For the Paid Listing Management Program the following charges apply:

• Set-Up - $350: Initial consulting and keyword selection, program registrations, account setups, ad creation and opening bidding on keywords. (Maximum 100 keywords across 3 programs, and for 1 web site).
• On-Going Management - $145/month: This is optional, and if you would like us to look after things for you once they are set up, such as monitoring keywords and ad performance, fine tuning bidding profile and keyword profile, managing bidding costs and budgets. (Minimum 3 months, payable in advance).

Please Note: All charges for paid listing will be charged directly to your credit card by the provider of the listing. We don't recharge these costs.