What’s the ROI on SEO? Hint: SEO Experts Are Underpaid, Opportunity Abounds!

Update: Check out this “How to forecast SEO ROI” article if calculating the ROI on SEO is the info you want.

What follows is an editorial/research article showing that SEO is valuable – but not explaining how to calculate it.

I was asked what the ROI on SEO is a few times at a recent business event, and decided that it was about time someone spoke up for us organic search marketing experts. The sad truth is that we SEO Experts are grossly underpaid! Let’s look at some stats (or damned lies, if you prefer).

According to a SEMPO report, the North American Search Marketing industry grew to $12 Billion in 2007. (Worldwide numbers are unavailable, but presumably much larger.)

According to the same report, 88% of search marketing dollars were spent on PPC while only 10.5% of that went to SEO. Various miscellaneous categories, including an amorphous “technology investment” (Analytics? Content management systems? Web design? Servers? …) capture the remaining handful of percentage points.

An older study from 2004, by Internet Retailer, showed respondents saying that the conversion rate of organic traffic (i.e. the traffic gained from SEO) was greater than that of PPC.

“Nearly one-half—46.1%—maintain that natural search delivers better sales conversions vs. 37.3% who cite pay-per-click as a better conversion generator and 16.6% who say paid and natural search perform equally as well.”

Conversion rate, for those of you who may be newer to the search marketing business, is the percentage of visitors who buy. If 3 out of 100 visitors buy your blue rattle, your conversion rate is 3%. So what the majority of the retailers above are saying, in other words, is that the ROI on SEO is better than that on PPC. This old SEO Chat case study also shares a higher conversion rate on organic results.

But wait, there’s more. Consider the fact that a majority of clicks on a page of search results go to the organic listings. I’ve just spent an hour and can’t figure out the keywords to unlock the studies to “prove” this, but since it’s so commonly known, I’ll ask you to take my word for now. If you do have a study to share on the CTR for SEO vs PPC, I’d be happy to see it.

Update: In the comments, Antonio of Marketing de Busca shared the following great post with data straight from the horse’s mouth: Avinash Kaushik (consultant at Google) cites 86% of clicks as going to the organic results and 14% going to the sponsored listings.

So, to summarize, here’s the situation in the search marketing industry.

  • landslide majority of the money spent on search marketing
  • Is going to attract a minority of the search engine traffic,
  • Which paid traffic provides a lower ROI than SEO.

Let’s be clear. PPC is a great way to build a business and gain sales, and it should be a key part of any balanced search campaign. There’s no doubt about it; only doing SEO can have you waste months optimizing for keywords that convert less well than others you could have targeted!

But there’s also no doubt that there’s a huge ROI opportunity in SEO because such a relatively small percentage of search budgets is going to deliver organic results, not to mention that those results deliver a better ROI than PPC results. I look forward to hearing and responding to your comments, and suggest that if you liked this post, you subscribe to my blog’s RSS feed. You may also care to read this related guest post I wrote entitled, “What Every SEO Needs to Know about Branded Search ROI” and this on the three types of SEO consultants: Good, Rad, and Sexy.

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Author: sroiadmin