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Measuring the ROI of Local Search Marketing

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Local search marketing can significantly boost the visibility of your company in the search engines which implies that it will achieve incrementally improved coverage to the thousands or tens of thousands of people who search – each and every month – for keywords related to your business and the goods and services you offer.

And if you target the "optimal" keywords – those with a measurable search level but relatively small levels of competition – then you can take over the top rankings in the search engine results for a variety of content:

  • Web pages
  • Images
  • Videos
  • Local business results

In doing so, you can lead the first page of the search results which means that every single keyword you target can supply several sources of traffic to your website. And, more notably, a source of leads, direct contacts; emails and phone calls, and customers for your company – because the more your business appears on the front page of search results, the more powerful its impression becomes on those searching.

Although it commonly takes a website some time to be positioned in the top of Google's organic search results the only approach to reaching the top of Google's local search results is by creating or claiming an existing local listing.

Fundamentally, if you're going to invest your money or time in local search marketing, you must look for the answers to three questions:

  • What is my ROI or Return on Investment?
  • At what point will my efforts = my return (breakeven)?
  • What is the risk?

Before you start you want to know if the effort will be worth your time and investment. Setting aside breakeven and risk, let's consider the steps you must take to "forecast" or project the ROI of a local search engine marketing effort.

You must set goals or expectations for your marketing campaign. What is it that your business wants to achieve; more traffic to your website, client visits, increased sales? For this example we are going to use website traffic.

To properly assess ROI you must first measure the average annual "value" of a typical customer. For each industry this will be different but can be calculated none the less. Take into consideration the following; annual sales, number of transactions and the average transactions per client. You can then anticipate the value of each transaction and then the value of your customer.

Next consider your current situation or take what I like to term, baseline measures. Using our website example; what is your current volume of traffic, of this figure how many become customers? Out of the volume of visitors to your site what is the percentage that you can "convert" into customers? This is your current "conversion factor".

You will then want to estimate or "forecast" how your site will perform AFTER you make the change. Monthly how many additional visitors will be generated based on your efforts. If you are using a keyword campaign how many new visitors will be directed to your site based on each targeted term. This will provide you with a figure representing NEW visitor traffic. Multiply by 12 to calculate the yearly effect.

Using figures that you now have you can calculate the anticipated year revenue generated from your marketing campaign. Calculate the "conversion factor" of your new traffic by multiplying your anticipated traffic by your conversion rate. Multiply this figure by the "value" of your customer and you will have generated a projected value of Sales related to your efforts.

Now comes the easy part, calculating the cost of your marketing campaign. How much did you spend on your campaign? Do not forget that does not include simply the direct money that you spent but also includes the value of your time invested. While it is not a direct expense it should be considered as it is time that you would have otherwise had to "purchase" elsewhere.

Finally you have all the information required to generate your ROI or Return on Investment. Take your forecasted increase in sales and subtract your cost. This will give you a general profit figure in dollars but this is not your ROI. Take your profit and dividend it by your cost and multiply by 100, this final figure represents your companies ROI in percent.

At the end of the day, local search marketing is a "gift that keeps on giving" because efforts that your company makes today will not be mercifully pay off tomorrow but well into the future. Given that the future of local business marketing is online, establishing a solid presence today is the most advantageous way to grow your business and guarantee that it will continue to grow well into the future.

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