The Hunt for Online ROI with SEO and SMO by Karl Hindle

After the Holiday season sales data has provided much needed cheer, we are now firmly into 2012 and economic reality beckons. Online spending is expected to rise, user time online is set to rise and the number of Internet users is set to rise – all the metrics for online marketing spending are positive.

Last night I spoke with a client, Rob, on where he should be spending the budget for online marketing. The initial call was prompted by Rob seeking validation for hiring a Social Media consultant and should his business be spending more money on social media optimization (SMO) instead of search engine optimization (SEO).

I didn’t give him that validation.

The question is not whether more money should be spent, but which channel is going to generate more ROI.

Do you get more profit out of a marketing dollar spent on Facebook or Google?

Search Engines versus Social Media Competition for Online Marketing Budget

I’m going to make a simplification here and say that as Google dominates the search engine space, when we talk about SEO we are really talking about Google optimization.

With Social Media, Facebook dominates that space, so when we talk about SMO we are talking about Facebook optimization.

ComScore collects and publishes data on Internet usage, including the traffic levels for major websites. The December traffic figures (unique visitors) look like this:
1. Google – 187 million visits
2. Bing & Microsoft – 177.3 million visits
3. Yahoo! – 176.5 million visits
4. Facebook.com – 162.5 million visits

While Facebook is the news darling right now, due its IPO announcement a couple of weeks ago, the traffic numbers show they are trailing behind the search engines. More than this, the gap widened between the top 3 and Facebook – in November, Facebook was only 8 million visits behind Yahoo! but this widened to 14 million in December.

What this is saying to me is that when online shopping activity was hitting peak volumes, users were going to the search engines, and not to Facebook, to spend money online.

Problems with Social Media Claims

Social Media advocates argue that there is a greater opportunity for brand interaction with consumers. Facebook users spend hours on the site, as opposed to minutes on Google. Facebook is a place to hang out, but Google is a utility or commodity you use just when you need it and then move on elsewhere.

I agree with that analysis, but it hides two very big problems when it comes to monetizing user time online.

Social Media Problem #1

The first problem I have with Social Media claims is that SMO marketers have yet to come up with a way in which they can effectively sell to users.

The issue seems to me to revolve around gatecrashing a party. I’m at home; my friends and family are enjoying themselves until a local car dealer rolls onto my lawn with a big SUV covered in balloons. Now we start getting yelled at about the great deal on financing being offered right now.

In real life I’d call the police, the Better Business Bureau and wouldn’t set foot on their lot ever.

On Facebook, I passively feel intruded upon and move on.

But that is exactly the marketing conundrum with Social Media; just how do you effectively intrude on “private” socializing time of Facebook users and get them to buy?

Facebook hasn’t solved that SMO problem, which is why it generates only $5 per user per year in revenues.

On the other hand, Google has solved the SEO problem, which is why it makes $30 per user per year.

Social Media Problem #2

Facebook claimed its one billion account creation last year, but having a FB account is not the same as being an active user. Facebook fatigue does set in, and I’ve noticed with my own circle how usage has diminished from the heady days of a couple of years ago.

I cannot say how many Facebook accounts are active, nor how many are genuine. A lot of duplicate accounts exist and many are also dormant. I also suspect many are not real people, but marketing “personas” and accounts created to try to interact with the real users as marketers try to sneakily gatecrash the private party.

The Facebook IPO has also unveiled some interesting data, as covered by Barry Ritholtz in his post, Who’s a Daily Facebook User? Anyone who clicks “Like” over at The Big Picture.

Facebook counts you as a daily active use if you simply log into a website with your Facebook ID or click on a Like button.

Whenever you use the extended FB infrastructure you are classed as a Facebook user.

The kicker here is that you don’t need to VISIT the Facebook site itself!

If you don’t go to Facebook.com, how can you see ads and generate ROI?

You can’t!

No-one can.

Eyeball time on site is not such a strong indicator of marketing opportunity and effectiveness after all.

My Advice to Rob and Every Other Client

Once you grasp that Facebook is for fun and Google is for doing business, the decision is simple.

Relatively, Google is where the ROI lies and not Facebook, which means you ought to be focusing online marketing spend on search engine optimization (and PPC) rather than SMO and Social Media.

Until Facebook and SMO works out how to monetize all of that eyeball time, Social Media spend is spinning wheels for the majority of businesses. Personally, I haven’t seen a positive ROI from a Social Media campaign my clients have undertaken, but I see SEO generate positive ROI every day.

This may all change in future, and I am not saying Social Media has no place in online marketing because it does, but so far Social Media has not shown me the money.