Link building is often grossly undervalued

[goodroi]

Ever gain a really great backlink? Of course because you are all Super SEOs
Did your rankings & traffic improve? Very likely.
Did you take the time to figure out how much profits went up? What do you mean, you didn't?

Let's look at a theoretical situation. A local lawyer gives an interview to a local community group and this results in gaining some relevant backlinks (community group website, local blog, etc). The links help to boost the rankings of the website from #8 to #2 for the money keyword which translates to an extra 10 people a day from Google search. The lawyer website converts about 1% of visitors, so 3 new clients/month. Let's say on average each client generates about $500/profit. So these links equals $1500 a month or $18,000 a year in extra profit. Remember this is just a theoretical situation and I'm sure your situation is different.

By crunching the numbers for your site you can discover just how much backlinks are worth to your business. I know it might feel like Google considers all link building to be dirty manipulation that will eternally penalize your website. That is not reality. Legitimately marketing your website and building your brand is a healthy for a business. So go crunch your numbers and see just maybe if you should be focusing more effort towards link development and maybe not worrying too much about less critical elements.

PS Don't forget really good links can also generate their own referral traffic breaking your site from Google dependency.

[martinibuster]

This is really tough.

I agree 100% that link building contributes to the bottom line in a big way. The problem I have is assigning an ROI value to the different activities necessary for cultivating those links. For practical purposes, one cannot do the analysis paralysis thing but leap into it and assign an actual dollar value to the activities. But the actual value (when successful) is far and away greater than the money invested.

I posted the following on my blog a couple years ago, and I'll share it here:

The ROI of search advertising is directly measurable. The ROI of television advertising cannot be directly measured. The kinds of activities useful for attaining natural links are closer to the television advertising model in the sense that they cannot always be directly measured…

The impossibility of direct measurement is not a problem inherent in the process. It’s a problem imposed upon the process from without, by Internet Marketers and clients who are accustomed to measuring ROI and choose to make it a problem.

What I'm trying to communicate is that Internet Marketing is accustomed to assigning ROI values to activities and advertising spend. However the kinds of activities necessary to producing natural links tend to not have an immediate effect and sometimes they have an indirect effect.

Then comes the issue of valuing a link according to a third party metric that often has no correlation, zero, to influence for ranking. That's something imposed from outside, from without, from on top, like forcing an object with a square hole onto a round peg.

Then there's the consideration that some backlinks may not contribute toward a ranking, but might contribute toward authority, because the link isn't really about Blue Widgets so the vote doesn't carry any kind of ranking power, because the page the link is on isn't about Blue Widgets, but maybe it's about Widgets in part or whole. But how does one know which link contributed to ranking, which link contributes to authority, which link contributed at all?

It's really tough.

[iamlost]

Given that I have absolutely no idea what values, if any, Google or any other SE has associated with any link I don't bother with fictive third party attributes or my own wishful thinking; instead I associate value with links in two ways:
1. referred traffic.
Both quantitatively by volume and qualitatively by conversion rate.

2. referred authority, trust, etc.
This is somewhat pie in the sky but can be inferred by
* external mentions
where a SM comment, blog post, news article mentions that so-and-so says I'm the greatest and links to my site. That can then be leveraged into a marketing citation.
* induced testimonial
where some noted somebody says I'm the greatest on a page with no traffic BUT that I can refer to and quote; i.e. turn a hidden citation into a marketing citation.
* implied testimonials
where membership or other ability to display third party trust symbols AND that I can refer to and quote; i.e. turn a hidden citation into a marketing citation.
Note: marketing citations can further be leveraged into links within third party mentions, stories that would otherwise have not been written and/or not included the authority/trust 'verification' factors.

As I followup every traffic referring backlink any mention of authority and trust factors can be determined to a reasonable degree and subsequently the business (if not SE) value of associated traffic as well. Granted, it does take analysis to levels well beyond mere analytics (Google Analytics, Piwik) software output. Not something many are doing.

[martinibuster]

iamlost, those are great metrics. Really nice, thanks for sharing that. :)

[tangor]

All the above!

Me, I just keep it simple.

Backlink: more traffic, more conversions?
GOOD!

Backlink: not so much goodies?
Still good.

Backlink: spam/negative?
Destroy ... like Right Now!

Managing Backlinks?
Full Time Job ... but I already have a full time job, so maybe I'll get a ROUNDTUIT.

All the above, for me, are NATURAL backlinks. I haven't sought them out for the last five years. When I do get them they are deserved because the content/product brought them. Trying to slice and dice the ROI is too time consuming (and mind numbing) for me. I just look at the overall result. And...

With rare exception have ever been disappointed by a natural backlink.

Yet, in these days and times of ever granular data seek, I can see how this branch of on line metrics can have value. Thanks, goodroi, for the mental exercise! martinibuster and iamlost kudos. All thoughts expressed might be the future of inet marketing.

Me, I'm still stuck in the 1950s (advertising/selling) and it ain't failed me yet. :)