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CEO Tells Wall St. Why He Invests in SEO

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Nothing's tougher than facing Wall St. analysts when the economy's sliding into a recession. Tom Evans, CEO of Bankrate, Inc., faced one of the toughest quarters in the company's history in Q3 2007. During the earnings call, he explained how and why Bankrate survived the early days of the subprime crisis.

Tom Evans, President and Chief Executive Officer, Bankrate, Inc.

I am quite sure that the last quarter was without a doubt the most difficult quarter for our advertisers that they have seen in a long time. There is obviously a lot of noise about the softness in the housing and mortgage industry, negative news about subprime loans, and concerns about bank liquidity. However, I think our business seemed to have weathered it pretty well.

Traffic for the quarter was up 14 percent versus a year ago, and 6 percent ahead of the second quarter 2007. We were pleased at the strength of the traffic, given that it was such a crazy quarter.

When the subprime crisis broke, analysts and search industry pundits wondered whether paid search marketing had somehow contributed to the rapid growth of approved subprime loans. Soon it became clear though that paid search, if anything, had helped banks screen unqualified leads.

Most major banking institutions and mortgage lenders close the marketing loop for online leads. Banks can not only pre-qualify leads, they can score them. That means unqualified applicants can be filtered before entering the bank's database.

Bankrate depends not only on paid search marketing to generate leads, but natural search traffic as well.

Evans noted during the earnings call that organic direct traffic accounted for 75 percent of Bankrate's total traffic for the quarter. Of the total, partner traffic accounted for 11 percent and paid search made up the remaining 14 percent.

So what did Evans tell analysts he planned to do in the face of a recession? He said, "We continue to increase our search engine spending."

That makes sense, given the quality of paid search leads and the relatively low cost per acquisition (CPA) of search engine marketing leads. In recessionary times, people turn to the Internet more often for research. What they expect to find is quality content that helps them solve problems. But should that content reside only on the Bankrate.com Web site?

Evans said, "As we have said many times before, the growth in organic traffic points to the strength of our core business and reinforces the value of our content, the value of having our data and our brand exposed on as many Web sites and in as many newspapers as possible."

What role then does natural search traffic play in an integrated marketing plan? How important is it for companies to spend time and resources on search engine optimization? In a recession, can SEO contribute to higher margins?

Again, Evans trumpeted the value of organic search:

We believe that organic traffic is less susceptible to competitive market dynamics, and is reflected in driving higher margins to our bottom line. Organic traffic continues to grow at double digits, and free traffic is always a good thing. We also see a positive trend reflected in the number of unique visitors to the site. August, with over 6.1 million uniques, was our highest month ever. And uniques for every single month this year have been higher than the same month last year.

While many hard-working SEOs may argue whether the traffic was "free," all would agree on its value to top-line revenue and bottom-line profits.

Wall St. analysts, though, are no longer impressed solely by a CEO dropping SEO into a conference call. The best analysts ask probing questions and test the breadth and depth of a CEO's search engine optimization strategy.

Fortunately, Tom Evans gets it.

Canaccord Analyst, Colin Gillis, asked a tough question: "So Tom, what elements of the site redesign are being added to improve SEO performance or perhaps drive more links to Bankrate?"

Evans replied, "Well, one of the things that we have always been very conscious of is, and we sort of have an inside metric, we don't play any games to try to trick the search engines and to try to improve the rankings, via tricks or games."

For SEOs who think standards aren't important to CEOs, they're sadly mistaken. CEOs care about their brand and whether the company follows Google and other search engine webmaster guidelines.

Evans noted, "I think the reason we do so well in SEO is we have an enormous amount of content. We have an enormous amount of tools and calculators, and I think we have done a good job from SEO with, we have got literally millions of links into the site and out of the site, and I think that it really helps."

He couldn't be more right. Here's a CEO who got down into the weeds of SEO and learned what works and what doesn't:

You know 170,000 rate tables that are all dynamically generated. I mean, we are just a site that does well from an organic traffic standpoint because of the depth and breadth of the content and the quality of the content. The quality of the clicks and things like that, so we'll continue to enhance that.

We are always adding more from an editorial standpoint. We are going to be launching lots of new calculators in the next three months and concurrent with the redesign. So we are going to be doing a lot of things. But we rank pretty high organically in a lot of different areas.

So is that all there is? SEO has worked wonders on the site. Now is it time to sit back and rest on the company's laurels? Not at all. Nor will SEO spam, tricks, or gaming take Bankrate higher in the rankings as the company diversifies its offerings.

"As we beef up other areas like credit card, like college finance, like insurance, that will help us in those areas," said Evans. "So we think we have got a pretty good focus right now. We think we have got a pretty good position. There is always room to improve, but it is not by any magic tricks or any game plan that we are going to improve."

* all quotes courtesy of SeekingAlpha transcripts.


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