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With Search, Second Place Is Just The First Loser

Some folks get real excited when they start seeing their pages begin to show up on search engine results. Too many companies don’t realize just how huge the game is and how much money is at stake when it comes to keyword ranking and the value of search engine placement.

So… here’s an example where I can quantify the value of rank. Let’s imagine we’re a San Jose Real Estate Agent and we’ve got a great blog and search engine marketing campaign that’s driving us upwards for the term San Jose Homes for Sale.

  1. Last month, there were 135,000 searches for San Jose Homes for Sale.
  2. The median home price of a home for sale is $544,000 in San Jose.
  3. Real Estate commissions are between 3% and 6%, so let’s imagine a 4% median commission rate.
  4. Let’s now imagine that only 0.1% of searchers resulted in an actual sale.

SEO Researcher has provided some statistics on rank and response, so let’s do the math and calculate the commissions from a position of 8 on the page, to a position of #1 on the search engine results page:

sales-commissions.png

Currently, Trulia holds the #1 position and Zillow holds the #2 position – not actual real estate agents. However, the fact that simply by holding the #1 position Trulia holds 56% of the clicks for those searches – an estimated $41 billion in Real Estate searches for a single city. Zillow is just under $10 billion. By the time you get to the newspaper, the Mercury News, you’re just under $3 billion.

I am curious why the agents and brokers in the region are letting these directories win… they could be competing instead of relying on them. Wouldn’t it be worth it for one of the regional brokerages to spend a couple million dollars on search engine marketing? Yes… yes it would.

Trulia is winning 4 times the traffic with this single keyword! 4 times! When you’re evaluating search engine companies and consultants, don’t get past this fact. Keep in mind that it begins to get very expensive to compete in these competitive terms and high volume searches, though. We’re working with a key client right now and pushing them up the search engine results page. We need to get #1 spots for them for the campaigns to fully pay off and provide us with additional work. The stakes are huge and we’ll get there – but it’s taking a lot of effort.

Many companies are happy when they’re just on the first page… huge mistake. It’s simply not enough to show up for specific keywords in search engine results – winning those searches is key to winning the business and the dollars behind those searches. Begin to calculate the return on investment for your keywords, close ratios, and revenue. You may find that it’s well worth spending hundreds of thousands of dollars for search marketing strategies. If you don’t realize it – perhaps your competition will.

As my Dad used to tell me… “Second place is just the first loser!”.

3 Comments

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    WOW.

    The difference between #1 and #2 is a lot bigger than I thought it would be.

    I wonder if this will stay consistent or if customers will begin to drill down a bit further once the market matures a bit…

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