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Frequently Asked Questions

Aren't SEM and SEO only for big players such as Walmart or Nordstrom?
The main reason for Google's rapid rise is that it allows anyone with even a small budget of a few dollars a day to become an advertiser. The Internet advertising playing field has been leveled and a small business can now compete, and in fact outsmart Walmart impression for impression, click for click, keyword for keyword.

Are there any situations that lend themselves better to take advantage of a SEM campaign?
Yes, but this is perhaps best answered by specifying what may not lend itself well to a SEM campaign. As an example, if you are selling durables online (E-commerce) for about $20 of margin, or less, it will be very challenging to make a SEM campaign profitable for you. This is because it costs you money to get a visitor to your site. Visitors convert into buyers at a certain percentage rate, which you can usually estimate well, but partly determined by how well your website is designed. Furthermore, if there is little chance to convert a buyer into a repeat customer, (note the use of the word "durable" in our hypothetical example here), then just doing the Math based on margins, conversion rate, cost per click and buyer pattern may tell you that SEM is not for you.

On the other hand, if what you are selling has good margins, then if done right, SEM will almost certainly bring you additional profits. This is true regardless of the product category or vertical that you are selling in, and even regardless of whether you are only selling offline (and using your site only to generate leads).

Most of my sales are generated by attending trade shows, advertising in industry specific journals and of course, referrals by satisfied clients. How could a SEM campaign even begin to compete with my tried and tested sales methods?
A well run SEM campaign will also deliver strong sales leads with high customer conversion rates particularly for a company such as yours which has the benefit of a satisfied client base. Trade shows are great to have face-time with your prospective clients, as well as to scope out your competition. But you may have noticed that attendance at tradeshows is declining. You may have also noticed that the thickness of the industry journals in which you advertise has decreased. This is because most companies today have websites and it's far easier and economical for your prospective clients to browse a website rather than make the effort of attending a trade show, or leaf through several trade journals to find the product or service that they need.

By pursuing a SEM campaign you enable your prospective clients to find you when they are ready to find you. To be sure, even after finding you as a result of a search query, they may still want to talk to you first. For instance, if you are selling a piece of equipment that costs $ 10,000 or more, your prospective clients may want to visit you to see a product demonstration before making a purchase decision. But you would have most likely faced the same sales cycle even if the same sales lead had been generated by a trade show or an industry magazine. But getting such a lead through a SEM campaign is usually at a much lower cost compared to the more traditional methods of new customer contact.

I'm doing very, very well with my business. We have a website but almost all of our sales are generated by us reaching out to our customers directly. Why try to fix something that isn't broken?
A direct sales force combined with a SEM campaign will allow you to add another "very, very" to your statement above. If your sales force is highly motivated and is armed with a product/service that they find easy to sell, then chances are that these same folks will be able to serve up even more sales for your company if provided with prospective clients who have sought your company out rather than the other way around. Because this is what SEM campaigns do: "they allow your prospective clients to find you just when they need your products or services most."

Our business has survived and done well all this while without us having to spend a single dime on these so-called "new media advertising channels." So unless TV, radio, newspapers, industry trade journals and trade-shows vanish into thin air tomorrow, I think we can wait to get started on SEM or SEO. Isn't my reasoning correct?
Yes, indeed the chances of traditional media vanishing into thin air within the next year or two are highly unlikely. But after many years of hype it appears that the Internet is finally beginning to deliver on the promise of "information at your fingertips." Notice how an increasing number of people spend about as much time emailing and surfing through their Blackberry's as much as talking via this device? Well in a highly connected world, our behaviors are changing at an unprecedented level. We have grown accustomed to and expect to find information when we need it. This mindset is also altering how we expect to conduct transactions. Be it researching, finding and booking a vacation via a website, or purchasing the best cell phone service deal through a third party Internet consolidator, we are not waiting around for the merchants to open their stores, or concerned about the size of the business from whom we purchase our goods/services. Our point is that the longer one waits to get their business to be actively found via the Internet, with each passing day the greater the distance that one would need to catch up in the future. So the prudent approach would be to at least get started. Allocate atleast 10% of your advertising budget towards this effort and allow your customers to find you.

We run a retail operation that relies upon local sales. How could running a SEM campaign improve our revenue and profits when most of our new customers find us by looking us up in the Yellow Pages, seeing our store while driving down the street or by way of referrals?
Our answer lies in measuring the cost of customer acquisition. Hands-down, no sales channel can compete with free referrals --- certainly this works out to a zero cost of customer acquisition. Yellow pages and the likes thereof certainly have their value in that you have a motivated prospective client ready to buy, searching for a product/service such as your company's, but who's to say that they even see your ad, or for that matter call you before they call your competitor? But you still end up paying for the ad. A physical store front in a high traffic area delivers you potential buyers but you end up paying a high fixed cost merely for the chance to serve those prospective new customers. So in a good revenue month, your cost per new customer acquired may drop, but balloon into a high cost, when sales are slow.

Utilizing a SEM campaign allows you to set the cost of acquiring that new customer.How so? Well let's say you own a retail store that is selling branded cosmetics. If your prospective client happens to be aware of the nationally recognized brand (that you carry) and its efficacy in enhancing her beauty, she will search for her desired product through a search query (say on Google) and depending on your targeted geographical location ad campaign, your store's ad will show up in the sponsored link. Depending on a combination of your ad's quality-score (determined by Google) and the price you've bid on the key-word your ad can show up on the first page. However, it's important to remember that just because your ad shows up in the sponsored links doesn't mean that Google will charge you for displaying your ad. You will only be charged if your prospective client clicks on your ad-copy. And this is where you control the cost of the customer acquisition. To illustrate our example simply, if you determine that every time you sell this particular brand of cosmetic you make a net profit of $ 30 and that for every 100 people who land on your website only 2 people actually conduct a purchase. This means that you have a conversion rate of 2% and that you make a profit of $ 60 for every 100 new visitors to your website. So how much should you be willing to pay for those 100 clicks to get you those new potential clients? Well all else being equal, logic would dictate that you would pay as high $ 0.59 per click so that you would be left with at least $ 1.00 of profit after paying for the clicks. Of course, not many people would be interested in going through all this effort just to make a buck in profit! But our point is that you control the dial that sets your customer acquisition cost.

I am not interested in selling products through my website as much as building my company's brand and image. Is SEM conducive to this effort?
Yes, indeed! SEM can be used for brand building and/or lead generation in addition to ecommerce. The focus of the campaign may change a bit. For instance, if you are only interested in getting your brand name widely recognized, ad impressions of a carefully worded ad copy may actually become more important than clicks which cost you.

With all this talk of the economy going soft I wonder if this is the best time to take on additional expenses of spending money on online advertising?
Economic boom and bust cycles seem to be inevitable. However, your business will not fail because you increased expenses in order to increase revenues. Far from it. In an economic slow down, opportunities arise when weaker competitors fall by the wayside leaving you more room to maneuver. Indeed in slower times you can be choosy if you like, carefully deliberating on how much you want to spend to acquire new clients, what kind of clients you want to acquire and when you want to acquire them. All of which is achievable by way of SEM and at an expected lower cost to you because of reduced competition! So while it may be counter-intuitive, sometimes an economic slow down may be the best time to start a new business initiative.

If I were to start a SEM campaign, how quickly can I measure if it is profitable and correct course, as needed?
Perhaps, the most powerful attraction of running Internet Ad Campaigns is that everything is measurable. You can almost immediately see if a SEM campaign is profitable for you by tracking ad impressions, ad clicks and "conversions". By "conversions", we include visitors who may buy from you online, or give you their email address (if collecting email addresses is your goal) or even call you offline, i.e. "conversions" is determined by how you define your goals. You can quickly uncover the weak areas of your ad campaign and correct immediately. Furthermore, you can pause or even abort a SEM campaign anytime you wish.

Should I be running my SEM campaigns on Google which is the largest Search Engine or is it better to run my campaigns on the other search engines such as Microsoft and Yahoo?
There is a tradeoff here. Generally speaking, you, as an advertiser, can attract visitors for less money per visitor on Microsoft compared to Google. (Yahoo is somewhere in between). The reason for this is that there are fewer advertisers on Microsoft and therefore less advertiser competition for any given keyword. But in aggregate, Microsoft will not send you as many visitors as Google can because of the lower search volume.

Based on this, we suggest that you certainly run a campaign on Google. If you then want to go through the overhead costs of launching and maintaining another campaign, run a campaign on Yahoo as well. You'll likely get visitors at lower cost compared to Google. Then, if you have the appetite for a third campaign, run one on Microsoft.


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