Basic SEO Concepts: ROI (return on investment)
All businesses measure their return on investment; the people who have invested money expect to earn a profit. When you are running an online business measuring your ROI becomes even more important since things can happen so quickly in the online world. That means that you are going to have to be measuring it pretty much every day and make changes if it turns out that you are losing money.
The return on investment that you get is simply the amount that you get back for every dollar that you invest in your business. Ideally this number should be positive, otherwise you are losing money. When it comes to internet marketing the main reason that you want to know about your ROI is if you are running an AdWords campaign. In that case you are paying to send traffic to your site so you are going to want to make sure that you are making enough money to cover the cost of the traffic that you are getting.
If you are running an AdWords campaign and your ROI is negative you need to make sure that you stop the campaign right away, you can lose a lot of money if you are not careful. A surprising number of people will start a campaign and not even measure their return on investment and then seem surprised when all of their money is gone. Even if you have a positive ROI there is still room for improvement so you are going to want to track it so that you can get the best possible rate of return on the money you spend.
The first option that you have to improve your return on investment is to reduce the amount that you are spending for traffic. The cost for a click from AdWords can be as little as a couple of cents or as much as a hundred dollars. The more desirable keywords will have the higher price since there will be more competition. However most marketers do not target the long tail keywords that are related to the main keyword. That means that they are available for a much lower price and in many cases will convert better anyway. These are the keywords that you want to be targeting.
The other option that you have to improve your return on investment is to get better conversions. Largely this will come down to improving the sales copy on your site. In most cases you will find that if you get this professionally written you will get better results. It may also be that you are not targeting the right keywords and the traffic that you are getting is not interested in what you are selling. In this case you are going to have to rethink how you have set up your AdWords campaign.