Want to get more out of online marketing – but you don’t know SEM from SEO? You’re not alone: millions of small businesses are trying to understand how to effectively market their business online.

We recently spoke with Matt Malden of Yield software, a company that focuses on providing tools and expertise for improving online marketing results. He recently co-authored The Link Economy, a guide to maximizing the value of your web site, and shared some of his expertise for BuyerZone readers.

BZ: What do small businesses need to consider when they first venture into online marketing?

MM: There are a couple of critical aspects of online marketing. A lot of small businesses think of only one aspect (either natural search or cost per click advertising), but it’s important that both are considered in concert with each other.

First is SEO, search engine optimization. What you’re basically trying to do with SEO is make sure that the search engines rank you highly for natural search results – in other words, unpaid listings in the main search results.

The second is SEM, search engine marketing – also known as pay-per-click – which is advertising in the paid section of the search engine results. To get there, you bid on the search keywords that you want your ads next to, and they show up on the top and right sides of the screen.

I think there has been a lot of talk of both areas, but what gets overlooked is this: once you’ve spent all the time and/or money to get traffic to your site, how do you maximize experience for visitors once they get there? What you should really try to do is increase the conversion rate for customers, whatever a “conversion” is to you: a user who subscribes to your newsletter, purchases a product, requests a sales call, or downloads product literature. No matter what your goal is, increasing conversion is something that has a positive impact on your business

There’s a whole discipline called landing page optimization designed to tune your web site to convert more visitors to customers, no matter where they came from. Once you start considering SEO, SEM, and landing page design at the same time you can really structure a complete web marketing strategy.

BZ: What are the major mistakes companies make when planning an SEM campaign?

MM: I think the biggest mistake is that they put all their eggs in one basket. For example, some companies focus exclusively on free listings. That can be great – but there’s a lot of opportunity in the paid search results, too. On the flip side, you can focus a lot on paid search, but miss opportunities to get a lot of free traffic.

The broader issue is when companies focus on measuring “cost-per-click” [CPC].  It’s an important metric, but can often be misleading. With too much emphasis on CPC, what you’re trying to optimize is how to get people to your site at the lowest possible cost. What good is that if it’s the wrong people?

More important is the cost of acquisition [CPA]: the total cost across SEO and SEM to acquire a customer. That’s a more valuable statistic – in the first scenario, where you’re optimizing for CPC, you’re counting all the people  who never convert to being customers – keep in mind the difference between visitors, who just come to your site and leave, and customers, who perform the action that you want them to.

With CPA you get a pure measurement of the cost to obtain a customer: it’s the most relevant indicator of the value that your web marketing activities are having on your business. If you optimize your online marketing for the best CPA, optimizing for natural search is critical because you’ll drive more acquisitions without the costs. On the paid side, you can concentrate on acquiring the right traffic rather than the most traffic.

Having an effective strategy for minimizing CPA allows business to attract visitors that become customers, and let their competitors attract the visitors who are just going to be “clicks.”

BZ: What is the best approach/mindset to a complete SEM strategy?

MM: I think it’s really daunting for an average business to be effective in online marketing. It’s extremely complex and labor intensive – and at the same time, even a small mistake in managing a paid search campaign can quite expensive. I have empathy for businesses experimenting with SEM.

That said, it’s important to dive in and understand how the pieces of the puzzle work. Do your research and you can learn a lot: how to execute across paid and natural search, determine which is most effective, and decide how many resources to invest in each area. You’ll also learn that each discipline is complex in its own right, and it’ll take effort to be ultimately successful.

There are a number of technologies out there that are extremely helpful, as well as agencies and consultants who can help. It’s important to find someone or something to help you, so it’s good that there’s so much out there. It’s almost impossible to get the desired results in such a labor-intensive arena if you manage the whole process manually.

BZ: Are there other metrics that companies which advertise online should look at?

MM: After CPA, which I’ve already said is the most critical, there are several others to look at: conversion rate can tell you how your landing page and offer are performing, click-through rate lets you know how your ad copy works, and bounce rate – the percentage of people who leave immediately after arriving – shows you the traffic that’s not at all interested in your offer.

I don’t recommend you pay much attention to informational metrics like time on page. That can tell you how compelling your content is, but until you develop correlation that time on page leads to conversion, it’s not very relevant. The ultimate goal is to get them to convert and that’s the metric you should be optimizing for.

BZ: Is it possible to succeed at both SEO and SEM without sacrificing one for the other?

MM:  Absolutely. Although, while you should optimize each one in its own right, the strategies need to be integrated together. Your performance in SEO has a definite impact how you do on your paid search and vice versa.

If you’ve got the #1 position for keywords you’re targeting in natural search, the position you need to reach in paid search will be different than if you’re #3 or #15 in natural results. To figure it out, you’ll need to experiment: adjust your SEM bids, determine the value of the position you’re paying for, and see if the traffic still comes if you’re more reliant on your natural search results.

You don’t want to leave opportunities on the table. Use them to complement each other, but neglecting one over the other is a huge mistake.

BZ: What new strategies or methods are becoming more important in online marketing?

MM: The emerging trend is leveraging technology to optimize marketing spend and behaviors. Early adopters did this manually, modeling with spreadsheets and doing so periodically and reactively. Then a wave of consultancies emerged to apply domain expertise for SEO and PPC. They learned how to intelligently apply information technology, including specialized software, cloud-based systems, complex algorithms, and statistics, to optimize spend and labor cost for effective strategy.

So the trend is to use technology for a competitive advantage. If you’re not using these tools, how are you going to compete with the sophisticated, intelligent web marketing systems that are evolving?

BZ: What final tips can you provide for novice and advanced SEM professionals (to cut costs, become more efficient, get better results, etc)?

MM: A few tips:

1. Be empathetic with the user experience of your targeted customers. This starts when they’re in the search engines looking for your products and services: don’t use your language or the industry-approved terms. Think about the words your customers use to talk about your products or services.
2. Make sure your ad copy is stellar and representative of what you offer. Regularly experiment with your ad copy so it’s compelling and effective.
3. Search for your company and see what snippet shows up for your company in natural search. That snippet is something that the search engine reads from your page – most of the time it’s your meta description tag, but that’s not always the case. The search engine chooses what text to display, so know what they’re using and make changes when necessary.
4. A lot of novices direct paid search traffic to their home page – avoid this mistake. You want to take them to a targeted page that has content directly related to the ad they’re clicking on. Your company may have 10 or 100 products, but if a keyword ad promotes one specific product, the landing page should focus primarily on that particular product.

Finally here are two great ways to lower your CPA: effectively utilizing negative keywords and geo-targeting.

1. Negative keywords prevent your ad from being displayed to individuals who aren’t good targets for your business. For example, if you sell guitars, you’ll obviously want to bid on the keyword “guitars,” but you don’t want to advertise to anyone searching for “guitar lessons,” or you’ll getting a lot of traffic that’s not relevant to you. Adding terms that you don’t want to advertise on prevents your ads from popping up needlessly (and costing you money).
2. Geotargeting allows you to send different messages to different geographies. For example, the NFL can run one add that has a Redskins message in the DC metro area and a Cowboys message in Dallas. You can also limit the areas that your ad displays in, if you’re only active in certain markets.