Is SEO worth the investment – both in time and money?
The short answer is yes to both: SEO is a relatively low-cost marketing channel with high ROI potential. On the other hand, although it’s no secret that SEO is a long-term effort that can take months and even years before you can see results. However, the generated result is also long-term and sustainable.
With its obvious benefit in generating valuable organic traffic, it might seem that investing in SEO should be a no-brainer for any business. Yet, as a digital marketing agency, we’ve heard almost every objection imaginable to investing in SEO, from complete misconceptions about SEO to concerns about ROI.
This is why, in this guide, we will discuss why SEO is certainly worth your investment, but let us start from the very beginning.
What Actually Is SEO?
SEO stands for Search Engine Optimization, and although we can use all the complex jargon and technical terms to describe it, it is simply about optimizing everything on your website so it performs better on the search engine results page (SERP). Performance, here, refers to ranking.
Why is ranking on the SERP important? Because it can help your site get discovered by your target audience when they are searching for queries related to your brand or product/service. Good SEO performance will produce organic traffic. In turn, more organic traffic would translate to more leads, and ultimately, more purchasing customers.
Why Organic Traffic Is Important?
In 2021, organic search traffic remains the largest digital channel with an average traffic share of 53% across all industries.
According to the 2019 BrightEdge research, organic traffic is responsible for more than 51% of total website visitors. More than half! Social media traffic, on the other hand, only accounts for 5% of the total traffic, on average, while paid channels like advertising only account for 14%.
So, if you want to bring more people to your website, organic traffic is very important, and SEO remains the best way to generate organic traffic.
Organic search will also provide you with the following benefits:
- As briefly discussed, investing in SEO is going to generate long-term, sustainable sources of traffic. Once the page is ranked high enough on Google’s SERP,
- 81% of surveyed consumers admitted to conducting online research before making online purchases, especially big purchases. Maybe you are one of the people that Google something when you are looking to buy a product or service. A lot of people are doing the same. Meaning, SEO can effectively bring potential customers to your site.
- Organic search traffic is highly targeted, highly qualified traffic. When doing an online search, the search intent is pretty specific. For example, when we are searching for “restaurants in NYC”, then it’s quite obvious that the searcher is looking to visit or order from a restaurant. On the other hand, when people search for product-related searches, then it’s likely they are looking to buy.
- The search engine is here to stay. Yes, Google might evolve with the introduction of voice search, rich snippets, and other new features, but the SEO principles remain the same, making it a future-proof investment.
- Simply put, people trust Google. If you rank #1 on Google for the relevant keyword, then your customers will perceive that you are a relevant, credible business. This is why the #1 ranking sites get 20+% of all clicks, and #2 gets only 10%. If you can rank higher on Google, you can put your brand in a stronger position.
Calculating SEO ROI
To truly prove that SEO is worth the investment, the best way is to actually calculate the potential ROI of an SEO campaign.
In a nutshell, ROI is how much money you generate from an investment, measured in percentage. If we invest $1,000 in SEO then we can generate $1,200 after a year via SEO, then the ROI is $200/$1,000×100%, and we get a 20% ROI.
As we can see, ROI, including SEO ROI can be calculated with a fairly simple formula:
ROI=profit of investment/total costs of investments
So, in calculating SEO ROI, we have to first define the two variables: the total costs of your SEO campaign, and how much profit is generated by the SEO campaign. We will discuss how to calculate them below.
Calculating SEO Costs
The difficult part of calculating SEO cost is that there’s no one-size-fits-all answer. You can technically implement SEO 100% free if you do everything yourself, while at the same time you can hire a professional SEO agency upwards of $10,000/month.
Since SEO is an organic channel, you don’t need to pay anything to get organic traffic from Google and the other search engine, so there’s $0 cost related to this.
If you outsource to an SEO company/digital marketing agency, the SEO cost will be fairly transparent: the fee you pay to this agency. If you are planning to work with a top B2B SEO agency in North America, it can cost at least $3,000 a month.
If you are planning to do your SEO in house, on the other hand, we have to calculate the common variables related to the SEO campaign. Calculating this will also help you in justifying the cost of outsourcing your SEO to an agency:
- Investment in SEO tools and software including keyword research tool, link profile analysis, monitoring, etc. You can use free tools like Google Analytics and Keyword planner and this cost can be $0, but it can be above $1,000 if you use premium software.
- Content creation. SEO is about regularly publishing high-quality content. Can be as low as $0 if you write your content yourself, to over $10,000/month. This will include content promotion costs like content syndication, guest posting, influencer marketing, etc.
- Technical optimization/website development costs. It will vary depending on the condition of your website, but a web developer in North America can cost around $75-$180 per hour.
- Link building services costs. Depending on the methods you use (influencer outreach, advertorial, PR) can cost upwards of $500/link.
As we can see from the above variables, the SEO cost can vary greatly depending on various different factors. This is why many marketers/potential SEO clients use the approach of first calculating the potential ROI before deciding on a budget, which we will discuss below.
Calculating SEO Profit
Calculating the profit generated by your SEO campaign, or even the revenue affected directly by SEO can be difficult. SEO can contribute in very different ways depending on your business model, but in general, SEO can influence your revenue/profit in three main ways:
- For eCommerce businesses selling products/services.
In this business model, the website is selling a ‘one-time-sale’ product/service directly on the website (as opposed to subscription-based, recurring revenue product/service). So, one sale conversion in this model is going to generate profit.
So, SEO in this model would directly contribute to revenue. For example, if SEO can bring 1,000 people to the website per month and 10 people (1%) of these visitors are going to purchase a product worth $10, then SEO can generate $100/month.
However, we shouldn’t calculate a single sale conversion in this model when calculating SEO ROI, but rather, we should calculate the customer’s lifetime value (CLV).
CLV is, simply put, the amount of potential revenue generated by a single customer over the length of their relationship with your business. For example, if a customer holds a relationship with your business for 2 years, and purchase a $10 product every month without fail, then their CLV is worth $240.
There are many different ways to calculate CLV depending on what you sell and your business model. You can check out this guide discussing various methods of calculating CLV and which might fit your business. The idea is, the more accurate you calculate CLV, the more accurate you can calculate your SEO ROI.
- For lead-based business (non eCommerce)
For businesses that are not selling their products/services directly on their website, measuring how the SEO performance influences revenue can be more difficult.
So, what we can do is to list all the possible touchpoints of your website visitors, which are the possible actions the visitors are doing on the website, and figure out how these touchpoints are going to contribute to revenue. This is called a marketing attribution model.
- SEO generates 10,000 visitors per month via organic traffic
- Out of these 10,000 visitors, 100 sign up for your email newsletter (1% lead conversion rate)
- Out of these 100 prospects, 10 end up purchasing your product worth $10 (10% conversion rate, $100 generated per month)
There are various attribution models we can use here, but the idea is to find out the contribution of SEO to your generated revenue. Again, you should measure the CLV of the consumer, and not the value of a single sale.
- For subscription-based, recurring revenue businesses
The main difference in this model is that a single purchase might not cover the cost of SEO (so a sale might not generate a profit). For example, if your SEO cost is $10,000 and your production cost is $10,000 but a monthly subscription is only $100, then you won’t generate any profit.
Instead, this model relies on long-term relationships and the quantity of customers, so measuring CLV in this model is very important. In a recurring-revenue model, we use metrics called monthly recurring revenue (MRR) and annual recurring revenue (ARR)>
For example, if with SEO we can generate 100 leads per month and the average lead-to-conversion rate is 20%, then these 100 leads would translate into 20 actual monthly sales.
If the average MRR from one customer is $100, then:
- MRR/customer= $100/month
- Conversion rate (lead to sale)=30%
- SEO generated leads: 100/month
- SEO generated sales: 100 leads per month x 20%= 20 sales/month, 240 sales/year
- Additional ARR from 20 sales/month= $24,000/year
Now that we’ve defined the cost of your SEO campaign and the potential profit generated from the campaign, then calculating your SEO ROI should be pretty simple:
SEO ROI= (Revenue generated from ROI- Cost of ROI)/Cost of ROI x 100%
So, you can now properly assess whether an SEO campaign is going to worth your investment based on the ROI.
Intangible Worth of SEO
While above we have discussed how to measure the tangible worth of your SEO campaign based on ROI, we should remember that SEO also provides intangible benefits:
- SEO is worth the time
One of the key concerns in implementing SEO is that in order to generate significant results from SEO, it can take a lot of time. This is why many people choose to do PPC search ads (including Google Ads) instead since paid ads can often generate short-term, even instant results.
However, while SEO can indeed take months and even years before we can climb on top of Google’s SERP, once you’re there you are going to have a long-lasting, sustainable source of traffic.
- SEO can help you find your target audience
When people are searching for specific queries on Google or the other search engines, they have a specific search intent. They might be looking for valuable information related to your niche, a potential solution for their problem that your brand can provide, or they might have a genuine interest in the product or service that you provide.
So, SEO can be a great tool where you can find qualified, highly interested audience, better than PPC ads and even social media marketing.
- Building your business’s credibility
A key aspect of any SaaS SEO strategy is to regularly publish high-quality, relevant content according to your target audience’s needs. This will help establish your business’s position as a credible thought leader/expert of your niche, which will significantly improve your conversion rate.
If your content is good, your readers/viewers will also share your content around, allowing you to reach more people in the process.
- Happier customers
User Experience (UX) metrics like bounce rate and dwell time are now direct ranking factors in SEO. So, your SEO campaign should involve improving your website’s UX factors like ensuring mobile-responsiveness, improving page speed, and optimizing your layouts and menus to please your visitors.
SEO best practices demand better website designs and layouts that your customers want, and happier customers would also translate to higher conversion rates. This will help your business in the long run.
So, is SEO worth it? The answer is a resounding yes.
Probably in the past, you’ve tried SEO with disappointing results. Or, probably you are just not sure of spending your already tight marketing budget on a long-term strategy that is SEO. Probably you’ve already invested in a pretty successful PPC campaign, and simply don’t want to add unnecessary investments.
However, SEO can be a low-cost, high ROI option to further enhance your business’s marketing performance, and it will also help improve your business’s overall SEO performance as a whole – which is really important for any business nowadays.
In short, if you haven’t invested in SEO, there’s never been a better time.