In the early 1960’s astronomer Frank Drake estimated the number of planets in our galaxy inhabited by intelligences capable of interstellar communication. Basically his method was to determine the total number of stars in the Milky Way, find the number of planets, and then multiply by a series of fractions that narrowed down how many of those planets are possibly inhabitable, what fraction of those actually developed life, on what fraction of those the life is intelligent, and so forth.
In search marketing, our mission is not to seek out new life and new civilizations, but rather the largest number of profitable dollars. For many online enterprises, this prime directive boils down to just:
That’s it. The simple truth is that the only ways for most companies to increase monthly profit are to increase the number of orders placed each month or the average profit per order (or both). The number of online orders per month is the number of searches times your impression share (IS) multiplied by the clickthrough rate (CTR) multiplied by your conversion rate (CR), so:
I call this The Drake Equation of Search Marketing. To some extent, it represents the actual mechanics of an online conversion. First, a search occurs. Some fraction (IS) of these result in an impression. Another fraction (CTR) of those impressions result in clicks, and some other fraction (CR) of those result in orders.
Every action we take as online marketers is intended to increase, directly or indirectly, one or more of these variables (without detrimentally impacting any of the others). But, of these factors, only the last two happen at your website. There, marketers apply landing page optimization (LPO), the purpose of which is typically considered: “to maximize the conversion rate (CR)”. However, we can see from the equation that there’s another facet of LPO whose purpose should be: “to maximize the average profit per order”. (Alternatively, one can simply combine these two factors, CR times ‘average profit per order’, to get the ‘average profit per click’, which is the overall metric by which the efficacy of various LPO efforts should be compared.)
The first three of the steps in this equation (searches, impressions, and clicks) occur on the search engine, where we do have some influence. Many people know that rank (a.k.a., position) strongly affects CTR, but so does the relative attractiveness of a listing.
PPC marketers experiment with the title, description text, and display URL in ad creatives to boost the CTR [Though again, they should really be maximizing CTR X ‘profit per visit’, which is ‘profit per impression’]. Similarly, SEOs influence organic results, since the title of a natural listing is often taken from the page’s title tag and the description from the meta tag or from text on the page. Online marketers often define the purpose of SEO to be something like “to get pages ranked as highly as possible for terms that are key to a site’s business”, but from the graphic above we can see that another facet to SEO is to make natural listings more attractive to searchers irrespective of any efforts to affect the listing’s position.
The primary factor which determines position in natural listings is ‘relevance’, which is partially found at the time of the query based on the page content’s quality and congruence with the search intent, but which is also partially determined by measures of the page’s ‘popularity’ which are calculated long prior to the query. We desire inbound links since each inbound link can be thought of, in some sense, as a vote by other website authors for our page, which boosts our PageRank. However, clicks at a search engine can also be viewed as votes for the relevance of our site, in this case, votes by the users of the search engine. Thus, click traffic becomes a self-reinforcing cycle, with highly relevant pages receiving more clicks (thus, a higher historical CTR) and therefore being treated as relevant in future searches.
The variables we probably influence the least are those at the beginning of the chain: the number of searches per month and our impression share. A massive off-line advertising campaign might drive additional searches for key terms, but as Frank Lee  pointed out in ‘2012: We Weren’t Warned, Only Teased ‘, even this is not guaranteed to produce traffic, let alone conversions. And, adding unique content to our site could increase our impression share, since it makes us more relevant to additional queries. But other than those, our best options are simply to promote good architecture to make our site easy to navigate (read: easy for search engines to spider) and to avoid hosting malware, or appear spammy or any of the multitude of reasons for search engines to switch our impressions off entirely.
- AdWords Position Preference is Dying. Good Riddance.  - April 7, 2011
- Is Google Exploiting Neuromarketing in Reporting Quality Scores?  - March 21, 2011
- Does Google Reward High Quality Scores with More Impressions?  - February 14, 2011
- Like a Rock: The ‘Bid-CPC’ Relationship  - January 19, 2011
- From Business Intelligence to Bathtub Insights  - December 30, 2010
- Google’s New “Automated Rules”  - December 9, 2010
- Braking the Rules  - December 6, 2010
- Google Rich Snippets for Shopping Sites: A New Dilemma  - November 4, 2010
- Quality Score Never Shined My Shoes  - October 19, 2010
- Ad Auctions are Not Auctions  - August 24, 2010