Choosing The Right Strategy For Your Online Business - 
Pay for Inclusion versus Pay per Click
by Richard Zwicky

Back in the old days of the Internet - in 1993, - there were 
284 locations on the entire World Wide Web. According to Bill 
Clinton, only 8 of them ended in .com or .net when he was sworn 
into office. As of January 1, 2003, there were 171,000,000 
domain hosts in use. In 1995, the largest search engine database 
was Altavista, and it had most of the Internet categorized. Today 
Google and FASTsearch own the largest databases. Yet neither one 
of them has even 10% of the Internet covered. It's estimated that 
more than 8,000,000 web pages are added to the Internet every day. 
None of the search engines are able to keep up to that pace. So 
how will your website stand out? How will it acquire the traffic 
it needs to succeed? There are many ways to approach the issue 
of marketing an online business, but for the sake of this 
article, we'll concern ourselves solely with online tools, and 
ways to expedite success. In that vein, we'll concern ourselves 
with Pay for Inclusion and Pay for Placement (or Pay per Click) 

What is Pay for Inclusion?

Some engines, such as AltaVista, Inktomi, Looksmart and FAST, 
use a pay for inclusion model. What this means is that to be 
guaranteed to be found within that specific search engine index, 
the website operator must pay a fee to be listed. It's similar 
to the fee a business pays for a Yellow Pages listing. These 
fees vary from monthly to annual. Looksmart charges a listing 
fee, plus a fee of $0.15 per clickthrough.

Engaging a Pay-for-Inclusion service does not come with any 
placement guarantees. If your website is not properly optimized, 
but you paid an inclusion fee, it is guaranteed to be indexed 
and listed somewhere within that search engine. If you want to 
ensure success with a Pay-for-Inclusion search engine, then your 
website must still be optimized. Without proper optimization, 
which includes an analysis from the perspective of all the 
factors that the search engines look for, a pay for inclusion 
service will not deliver the desired benefits to the website 

When properly matched with a comprehensive Search Engine 
Optimization regimen, a Pay for Inclusion program will result 
in powerful results: Qualified Traffic, Customers, and Relevant 

What is Pay for Placement, or Pay per Click?

Pay per Click advertising is the process by which a web site 
operator can arrange for a website to be placed in a pre-defined 
position within certain search engines, such as Overture.

Search Engine Placement is always a Pay-Per-Click solution. 
While advertising websites are only permitted to buy advertising 
in search queries that are relevant to their content, they are 
not sorted by relevance but rather purely based on bid value.

Pay per click services allow advertisers to bid for each visitor 
directed through to their web site, based upon the number of 
clicks the ad receives. Pay per Click search engine placement 
should be realistically viewed for what it is - an online 
auction. Advertisers bid against each other for a fixed position 
within a list of search results. The advertiser who bids the most 
is given the top spot in the list. Each advertiser bids according 
to their budget, and has to know his or her Return On Investment 
(ROI) to determine how much money should be spent on acquiring 
new customers.

How Do I Know Which Strategy Is Right For My Website? 

For those advertisers where the ROI is sensible or worthwhile, 
pay per click search engines are valuable customer acquisition 
tools. But is it right for you? While it can be expensive, 
here's a way for you to easily determine the ROI for your online 
business, and determine if it is the right choice for you. Take 
out a sheet of paper, and at the top of the sheet mark down the 
average price of the goods you sell - we'll use $100.00 for the 
purpose of the example. From that number, make some simple and 
basic calculations, outlined here:

    1.  $100.00
    2. -$ 50.00  Cost of Goods
    3. -$  5.00  Transaction Cost (bank charges, credit card)
    4. -$  8.50  Shipping Fees (This assumes you're delivering 
                 a product, it needs a box, label, and has a 
                 delivery cost.
    5. -$ 10.00  Customer support costs - time on phone, email, 
                 etc...supporting and processing the transaction. 
                 What's 1 hour of your time worth?
        $ 26.50 Margin

Assuming this margin is correct for your website, is a Pay per 
Click campaign right for you? You'll need to look at your stats 
to judge this properly. You need to determine how many of your 
visitors are converting into buyers. IF your website has a 4% 
conversion rate, and your category is moderately competitive, 
you will probably need to budget at least $1.00 per click to get 
spot #3. Spot #3 is important because more often than not it's 
the top 3 spots per page of search engine results that are 
reserved for Pay per Click advertisers.  

Assuming your website gets into the top three spots, here's how 
the math works if you get 100 clicks in a month. Since it's all 
percentage based, the same holds true if you get 25 clicks or 
10,000 clicks.

   100 clicks @ $1.00 per click = $100.00 cost.

   4% conversion = 4 sales = 4x $26.50 (margin on sale) = $106.00

        Cost     =  $100.00
        Margin =  $106.00
        Profit =  $  6.00

So, if the above were true, and IF the pay per click 
advertisement sent you 100 visitors per month, you would make 
$6.00. Would you make much less having spot #4 instead of spot 
#3 ? If it meant one less sale a month, that would be worth it. 
You would make $70.00 more by selling less! Does spot #3 get 
much more traffic than relevant results in spots 4 through 10? 
Not at all for spot # 4, 5, 6, and only a little bit more for 
spot #'s 7-10. Remember, people usually look at the title or 
site description to see if it is relevant. Pay per Click is 
worth the money if your website is not found under any relevant 
queries in the top 20, but its value drops quickly if a website 
is found easily in the free listings within the search engines.

Is Pay for Inclusion Less Expensive?

If we use the same calculation as above, and your website had 
4 sales from a pay for inclusion engine where you paid $39.00 
per year, or $3.25 / month, your profit would have been $103.25.

What About The Cost Of Search Engine Optimization?

Search engine optimization does not have to be expensive. You 
can do the work yourself, but you need to ensure that it makes 
sense to do so. By this I mean, is doing it yourself a cost 
efficient, business proposition? Any time that you as an 
individual put into search engine optimization is time that you 
take away from business fundamentals and essentials. It's time 
away from customer support, content creation, service, 
administration, product research, other marketing, etc... What 
is that time worth? It's got to be part of the ROI calculation 
too. More and more people are choosing to outsource this work. 
It's estimated that 70% of online businesses will outsource 
non-core operations this year. It only makes sense. It's smart 
business to focus on what you know and do well and to hire 
others to support you in the other areas. Not many smart 
businessmen write their own contracts - they get their lawyer 
to do it. They want to ensure it's done right. Doing it right 
in the first place saves money in the long run. Outsourcing 
means getting someone else to do the work for you, properly. It 
does not mean getting someone to tell you what to do, or how to 
do things.

What's Right For Your Website?

In the long run, a website operator that has a well optimized 
website will beat out a non-optimized website that concentrates 
on Pay per Click advertising for customer acquisition every day 
of the year. He may make fewer sales in a year, but he will make 
more profit from each sale. If the website is properly optimized, 
it will enjoy better placement in more search engines. This means 
it will survive, and prosper in the long run.

Richard Zwicky is a founder and the CEO of Metamend Software,  
( a Victoria B.C. based firm whose 
cutting edge Search Engine Optimization software has been 
recognized around the world as a leader in its field. Employing 
a staff of 10, the firm's business comes from around the world, 
with clients from every continent. Most recently the company was
recognized for their geo-locational, or LBS technology, which 
correlates online businesses with their physical locations.