One of the toughest decisions faced by a business owner is how to get the most impact from a finite marketing budget. There are a myriad of options available, but the most common ones include pay-per-click, social media, and link acquisition. The major difference between each of these is the timing of the impact of the expenditure (immediate versus long-term). These options are not mutually exclusive. Based on the business model and target audience, individually they will range from completely ineffective to very productive. Understanding each of them will help you make the best choice.
Arbitrage, as it pertains to the web, means making more money from your customers (often other advertisers) than it costs to purchase the traffic. If you sell traffic for more than it costs to buy it, arbitrage works. To do this properly you need to be able to carefully measure both the cost and the revenue. This is the single most common point of failure for business owners. If you do not have a good handle on this data, you probably shouldn’t be doing pay-per-click.
Revenue is measured as RPM (revenue per thousand visits). It is not hard to come up with general number (sufficient for many business owners) buy dividing monthly revenue by the number of visits. It can be further refined by channel (organic, paid, social, email, etc.) by using goals and conversions in Google Analytics.
Cost is measured as CPM (cost per thousand visits) and should be taken directly from the advertising dashboard. If RPM is greater than CPM, the paid effort is viable and should be continually increased until the ROI drops beneath that of other traffic alternatives. Once again, if you do not have a good handle on this data, you probably shouldn’t be doing pay-per-click.
If ROI is negative, then the paid campaign needs to be tweaked or suspended. Some business models are simply not conducive for paid search. Here is a simple example. A publisher who derives revenue by selling impressions is other advertisers is going to have a very low RPM. The publisher is actually competing directly against Google! A service provider or a brand that is targeting that same audience can afford to pay much more per click and that will typically drive the cost of the traffic above the publisher RPM. However, if the publisher can leverage its brand and audience, they could demand a higher price from an advertiser and come up with a positive ROI. The big problem is that service providers have the largest RPM, following by retailers, brands, and finally publishers. The viability of any campaign really comes down to understanding the competition for various phrases and targeting the right ones (if any).
The intangible element is the amount of inbound link acquisition. Social media channels are the best way to market content to other webmasters and influencers. If the content and strategy are good enough, there will be link acquisition. Every link adds to the rank and authority of the site in the eyes of Google. That means better organic search performance. In summary, a well-run social media effort can yield a break-even or slightly positive ROI while building a fan base and improving overall search performance. “Well run” is the tricky part for business owners and most campaigns are poorly run. However, recent changes to the Facebook algorithm create a unique opportunity for aggressive business owners (read more here).
Organic link acquisition occurs naturally at varying rates from the other channels. Social media can be the best (provided the campaign is well managed). Referral, direct, and email traffic are the next most productive, followed by organic search (typically the largest traffic component). Paid search provides virtually o inbound link acquisition.
Though Google suggests that “buying” links from other sources violates their guidelines, it still can be done. Writing a unique and compelling piece of content (including relevant links back to your site) and finding the right site to host it is perfectly acceptable. Provided the costs associated with the producing the content, finding the partner (host), and possibly compensating the partner are reasonable, this is always the most effective long-term strategy. These should not be treated as a monthly cost, but as a cost of improving the web presence asset.
Though there are third-party tools such as Webmaster Tools, SEO MOZ, and Ahrefs.com that provide some data, they do NOT provide an accurate measurement of inbound link acquisition. That can ONLY be measured by observing historical rank for various key phrases. The only tool that does that accurately is Rankmgr. Monitoring the rank for specific phrases and in aggregate is best way to measure the actual impact of inbound links.
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