Conventional wisdom among many startup founders and investors suggests that to build significant scale as an Internet company, you must be able to demonstrate strong repeat usage, engagement, and virality.  If your users aren’t coming back to your website frequently and/or sharing with their friends, how will you generate sustainable growth? While these metrics may be critical for some startups, there is one major exception to this rule – that is, sites that are fortunate enough to have figured out how to attract millions of free monthly visits from Google and other search engines.

Organic Search Market Overview

According to SimilarWeb, a platform for measuring consumer behavior online through its worldwide panel of tens of millions of users, in October 2014, an estimated 28% of all desktop traffic across the millions of websites in its database came from organic search (as opposed to direct traffic, referrals, or social media.) Within organic search, 89% of this traffic came from Google. In select categories though, the majority of traffic to all websites in that category is actually driven by users searching for something specific online. A few notable examples are Health (63% from search engines), Reference (62%), Food and Drink (57%), Home and Garden (56%), and Recreation & Hobbies (55%). Any company entering one of these markets would be making a huge mistake by not evaluating the potential strength of Search Engine Optimization (SEO) as a critical customer acquisition tactic.

Even some of the largest sites on the Internet are almost entirely dependent on organic search as opposed to direct visits or referrals from other sites. For example, in SimilarWeb’s Top 200 US websites, you’ll find popular sites like WebMD (87% from search engines), About.com (87%), Wikipedia (83%), TripAdvisor (70%), and Yelp (67%) that all generate over 2/3 of their traffic from users who first go to Google or Bing to type in a query. Without SEO, these sites would have a fraction of the traffic and revenue they have today.

Upward Mobility in SEO: A Boon for Startups

There is no doubt that organic search can be an extremely powerful customer acquisition channel, but how easy is it for a newer company to master the ins and outs of SEO and build meaningful levels of traffic in a reasonable period of time? To answer this question, I analyzed historical ranking data from SEMRush, a company that tracks keyword rankings and competition for over 100 million keywords on the web. In looking at the top 30,000 search-driven sites in the United States this month on SEMRush, I uncovered some interesting trends. When comparing this to a similar list from May 2012, the oldest data set I was able to access, I found that 42% of the top 30,000 sites today (as ranked by estimated search traffic) were not in the list of top 30,000 sites 2.5 years ago. This suggests a reasonable degree of fluctuation in search rankings that presents an opportunity for SEO-savvy startups to gain share against incumbents. In looking at an even more recent list (from August 2013), that number was still surprisingly high, with 29% of today’s top 30,000 sites not appearing on the same list 15 months ago. When analyzing the ups and downs of the rankings of individual sites more deeply, I found that a lot of the fluctuations seemed to be due to Google’s increasing emphasis on promoting high-quality content. Google’s major algorithm changes in the past couple of years have generally benefited agile, user-driven companies with a unique content strategy that sets them apart from competitors.

Some notable examples of sites that have benefited from a focus on SEO best practices include Genius.com (now ranked #181 on SEMRush), CarGurus.com (ranked #284) and ApartmentList.com (ranked #990) who all grew from nonexistent or relatively small levels of traffic to millions of monthly visits from SEO in less than 2 years. Although generating growth at this frenetic pace is not a trivial task, there were many other examples of new companies that entered the upper echelon of SEO-driven sites in just a few years.

How Startups Can Evaluate the Importance of Organic Search

Mastering SEO is certainly not critical for all startups, and its relevance varies significantly by industry. However, for any company that offers content of any kind that is likely to meet the needs of a meaningful population of online searchers, it is one that should not be ignored. Two fantastic research tools that should be explored have already been mentioned: SimilarWeb and SEMRush. With SimilarWeb, you can check to see what percentage of traffic is being driven by SEO for any competitors and other adjacent sites, and determine if it is moving the needle for them. With SEMRush, you can generate lists of hundreds of relevant sites that overlap with your top competitors in Google’s search results, and dig in deep to lists of thousands of keywords that may be relevant for your own site. By looking at patterns across groups of keywords and top competitors, you can start to piece together a preliminary view on which SEO strategies are most effective in your market and where there is room for improvement. Once you do this, you still have your work cut out for you, but popular resources like Moz’s Beginners Guide to SEO,  QuickSprout’s Advanced Guide to SEO, and even Google’s own Webmaster Academy and Guidelines can help get you up the learning curve fast enough to make strong progress on your way to generating strong levels of traffic from SEO.


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Social Media ROI – The Unicorn of the Online Economy?

My mother owns a small business, a chain of specialty retail stores. Over the past few years they have introduced a new store concept called Roster, selling sports lifestyle apparel in suburban malls. This new division caters to a different customer base than the rest of the business and in many ways Roster is introducing an entirely new category. These two dynamics have raised questions about how to build brand awareness to attract first-time customers to the offline stores and how to continually engage the existing customer base to drive repeat purchases. However, as a small business the company does not have a marketing department or much budget to invest… So what’s the answer? Social media.

Hype around the value of social media and the ease of advertising on social platforms has convinced many small business owners that going social is a worthwhile investment. In fact, 83% of marketers believe that social media is important for their business (1). My mother’s company has bootstrapped a social media presence together with help from high-school interns and in-store staff who post to the Roster Facebook page and Twitter feed. But just how much time and effort should this online marketing consume? This begs the question of how to measure social media ROI. However, 88% of 750 surveyed marketing professionals did not feel they could accurately measure the effectiveness of their social media campaigns and over 50% said that dealing with social media ROI metrics was their biggest frustration (2).

As small businesses try to understand social media ROI, nuances quickly emerge – for example, the number of impressions generated on Twitter or Instagram are often inflated, given they are simply the number of followers at the time of a given post versus Facebook, which will only report the number of times a user actually scrolled by your post. If you are translating impressions into media values via a market-rate CPM, such nuances are important to understand so that you do not over-value your social media results. In fact, 56% of companies report that they “struggle to efficiently capture and analyze information from multiple social media channels” (1). An even better example of how data nuances can significantly skew your analysis: “using first-click attribution instead of last click resulted in social media ROI data that was nearly twice as high” (1).

At the macro level, a shift in the types of metrics companies leverage to measure ROI point to the evolving role of social media (or a cynic could argue a better understanding of its limitations). A recent report from BI Intelligence reveals that “between 2010 and 2013, the percentage of marketers using a revenue-per-customer metric on social media went from 17% to 9%… and the percentage tracking conversion rates also dropped, from 25% to 21%” (3). There is an increasing level of skepticism around assigning a dollar value to social media and an increasing (and more realistic) focus on metrics that evaluate how social media drives brand awareness and customer engagement, e.g., number of followers, net promoter score.

The challenges of measuring ROI have given rise to a fast-growing segment in the online economy: social media analytics. Companies leading the charge in this space include Adaptly, SumAll, Custora, and Cyfe, while others such as Klout are even going so far as to invent proprietary metrics such as The Klout Score, a 1-100 number showing how influential you are in the social sphere…  Facebook has also bet big on social media analytics by acquiring Atlas Advertiser Suite from Microsoft in May of 2013, signaling that measurement is key to improving the effectiveness of Facebook campaigns and driving increased advertising revenue. (This acquisition strategy is also how Google built up its Google Analytics platform.) Given that Facebook owns Instagram they could also move to better integrate analytics across these two platforms, thereby solving another key pain point. Clearly social media advertising is here to stay, and these analytics platforms are necessary steps forward to help optimize social media spend in-line with actual “ROI”.

So what does all this mean for small businesses like Roster? First, be clear on what you can accomplish via social media. As the trends discussed above indicate, social media is at its core about brand building and awareness, especially for offline stores that cannot drive click-through to an online purchase. Second, it is important to track “ROI” but do so via simple metrics and tools that cannot skew your analysis, such as number of followers over time and “likes” per post. To take it one step further and try to track sales impact, focus on Facebook-specific coupon codes or offers from which you can capture redemption rates across campaigns and get a sense for how much foot traffic is driven via social media. Most importantly, track how much time and money you are spending on your social media strategy and make sure not to get carried away and over-invest.

Resources Referenced:

1.     http://websitemetrics.net/20-stats-that-explain-why-marketers-still-struggle-to-measure-social-media-roi/

2.     http://www.forbes.com/sites/capitalonespark/2013/04/25/how-to-measure-your-social-media-return-on-investment/

3.     http://www.businessinsider.com/the-myth-of-social-roi-2013-10

4.     http://www.convinceandconvert.com/social-media-roi/6-critically-undervalued-social-media-success-metrics/

5.     http://mashable.com/2013/02/13/roi-social-media/

6.     http://www.insidefacebook.com/2013/05/01/with-acquisition-of-atlas-complete-facebook-looks-to-improve-ad-measurement/

 

1.     http://websitemetrics.net/20-stats-that-explain-why-marketers-still-struggle-to-measure-social-media-roi/


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As consumers, we are accustomed to a retail environment where we can utilize online tools to assess the value of one product against another.  Whether comparing flights on Kayak or the price of a good on Ebay, we utilize these tools to obtain the best pricing on relatively commoditized products.  While initially beneficial to merchants, over time we have seen these aggregators sequentially intermediate customers and businesses, extract profits, and reduce the power of online brands.

Aggregators in Self Storage

Until this decade, self storage had been repeatedly lauded an “if you build it, they will come” industry, where demand consistently outpaced supply.  Most customers came from drive by and were supplemented by those who would find local storage providers in the area yellow pages.

For aggregators, several factors over the past decade have enabled an easier intermediation of the self storage industry:

1)      Supply eventually surpassed demand, resulting in reduced occupancies and a need for increased marketing expenditures.

 2)      Customers moved their search from drive by and the yellow pages to online and mobile in order to find self storage facilities.

 3)      Consolidation in major markets and the expense of online marketing allowed self storage REITs(Real Estate Investment Trusts) to dominate internet advertising.

 4)      The vast majority of owner-operators (72% of all companies) in the industry own and operate 1-2 facilities [1].  Generally, these operators have found the transition to the web technologically cumbersome and cannot compete online with REITS, which have multimillion dollar marketing budgets.

Self storage aggregators, and namely Sparefoot.com, developed a refined strategy of offering access to partner websites, such as selfstorage.com and apartments.com, with the promise of incremental lead generation.  These aggregators simultaneously developed a pay for performance model, where self storage facilities would only be required to pay a one-time fee once customers moved into the facility.  These strategies increased the likelihood that operators would partner with aggregators in order to increase occupancies.

While currently beneficial to most small to mid-sized operators, those that have begun their own online marketing efforts have found themselves at odds with the aggregators they had considered partners just a few years ago.  Aggregators are competing for the same search terms as their customers in order to receive a $75 – $125 conversion payment. To make matters worse, it is difficult for self storage operators to tell if converted self storage customers came from partner websites or if an aggregator intercepted a customer that was searching for that facility on the web anyway.  Thus, while reservations via aggregators, and top line revenues for operators, may be increasing in the short term, the long term prospect isn’t as promising.  As aggregators gain greater traction, they extract more and more value from the facility operators who they claim to have partnered with.  This is a slippery slope that could result in facility operators being married to aggregators that control major online marketing channels.

The lesson:  Self storage operators should take the money they are paying to self storage aggregators and invest in their own web presence while they still can, or otherwise they may be doomed to paying conversion fees to these aggregators in perpetuity.

[1]http://www.selfstorage.org/ssa/Content/NavigationMenu/AboutSSA/FactSheet/default.htm

 

 


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