Owners, Directors and Managers can often be sceptical of search engine optimisation (SEO) when considering their marketing budgets.

Here we will show you how to analyse the return on investment (ROI) of running an organic search campaigns, so you can better judge if this is the right marketing avenue to take.

The questions often asked - Is SEO even worth it?

Unlike other forms of advertising and marketing, there is no easy way (or at least one place) to measure the performance of an SEO campaign. 

Most industries have their own language, and you have to be in the know to communicate effectively.  The SEO industry is no different and has it's own language and to anyone on the outside, it just sounds like a lot of old jargon to bamboozle the outsider.  It's not done on purpose, having a bit of jargon just allows us to cut down long sentences into one word, we are not trying to confuse you.

And of course there are the cynics who simple believe that SEO won't work for them.

But the data shows SEO works when you have the right budget to employ the right people or hire the right company to perform this task.

How expensive is SEO?

Starting prices of SEO are around £100 to £500 a month, which is a budget fee aimed at smaller businesses as an entry point.  £1,000 to £9,000 for an agency, and for a consultant you can expect to pay £1,000 to £10,000 per hour.  As you can see it's hard to work out an average for this.

As the industry continues to fill with SEO's there becomes a larger pool of people/companies to choose from, which drives down the price of SEO which has certainly been happening over the past 9 years.

Prices vary greatly between SEO companies and individuals, which is mainly based on their costs and the amount of people they have to bring on board for your campaign.  This makes it very difficult to come up with an average SEO price.

But at least 56% of SEOs charge more than £100 per hour.  If your budget is £100 then don't expect miracles.

Business size, goals, and target market are huge pricing factors

A hundred pounds won't cover hosting services for a multinational company with hundreds of different products, it's going to cost them thousands per month and a new website from £70,000.  This is why it is so hard for small businesses to compete with large brands, but these big brands started out small and at some point they had to employee marketing and sales people to start increasing the size of their business. 

Coming up with and implementing a good SEO strategy takes time and expertise.  Often SEO is seen as a cost, when it should be looked at as an investment.  Just like when a new restaurant or shop is being planned, they need to be where the footfall is, they understand the rents on these properties are going to be higher, but the ROI will be better.  SEO is the same, except the people in the street are now the people in the search engines looking for your product or service.  Getting your business in front of those people 24/7, 365 days a year can be life changing.

If you are not willing to pay, or simply can't afford to pay for SEO, then you will have no choice but to invest a lot of your own valuable time on trial and error SEO.

How effective is SEO? Does it even generate sales?

SEO is very effective at generating traffic, that traffic then leads to sales.

Unfortunately managers can get too caught up in search specific metrics like their position in the search results, keywords and organic traffic.  Instead of the important stuff like more people through the doors and sales.

Organic search, which SEO is aimed at, gets more clicks than from a Google paid advert.  We have some figures below so you can work out if SEO is worth it as well as comparing the revenue value against Google paid ads.

Search intent and keyword relevance matter.  Someone searching for 'how can I unclog my toilet', is not looking for a plumber to do it for them.  It's great giving some free advice, but more content aimed at the person wanting to buy from you should be a priority.  When done right, SEO attracts potential consumers at beneficial stages in the buying cycle.

SEO generates more revenue than all other forms of digital marketing channels combined.

When will we see results?

As an example, one company spent £100,000 over 18 months and went from position 19 to position 6 while using a professional agency.

See the article here:
www.marketingweek.com/masters-awards-tempcover/

Below we show you how to work out the revenue value for your company at a lower budget, month on month.  You'll be able to see when you should start making money.

SEO does take time to kick in, but when it does it continues to work long after the SEO campaign finishes.  Most companies continue with SEO so they can keep ahead of their competition and target more keywords.  We recommend at least 18 months to 2 years before you really start to see an impact.

Lower budgets mean less time, and less people who can focus all their attention on moving your website up the search engines results, so expect your websites movement to be much slower the lower the budget.

Learning SEO yourself is going to be a painstaking process and will involve lots of trial and error.  If you can put a value towards every hour you spend doing SEO on your own website you may find it's cheaper to skip the learning by trial and error and go straight to someone who knows what they are doing and who will achieve results much faster.

If you still want to do DIY SEO

If you really don't have the budget, follow industry leaders in SEO like MOZ who have free training courses, and some free tools you can use to measure your website performance.  They also have paid services where you get access to people in the know along with more handy tools.

Even when following experts, test everything, because it will give you a great understanding as to what works for your website.

How will you manage all the work and run your business?

With technical SEO, link building and content creation you can bet most of your day is going to be taken up doing these tasks.

The things you need to consider in order of priority:

• Website Design - is it good enough
• Technical SEO
• Your strategy and time frame
• Creating high quality content
• Landing pages with sales copy
• Attracting links from other high quality websites

This is a lot to get your head around.  You don't need to fix everything at once, but the website is the foundation of your marketing plan, this has to look professional.  Sorting out your website and just having a few bits of technical SEO sprinkled throughout it, can work wonders if you only want to work locally and don't have much competition.  Then move onto the next item on the list.

Treat SEO as a long term investment, figure out which areas need the most improvement, and start there.  Create a roadmap for optimising your online presence.  If you just don't know where to start contact an SEO consultant or agency.

We can help you identify the areas with the most immediate effect.  Then we can develop the best investment strategy for you to deliver beneficial long term results.

Is SEO worth the cost for small businesses

As a small business you know you have to get out there and get seen, be that face to face, advertising or marketing.  Most of the time with starting prices in the region of £500 per month for SEO services it can feel like this area of marketing is out of reach.  So is it worth the investment?

To find out we need to dive into some figures and look at how much an improvement in search result positions (rankings) are worth to your business, and the alternatives and their costs.

What is SEO worth to you?

Here are the figures you will need, to work out if SEO is worth undertaking:

• Keyword search volume
• Search engine click-through rate CTR (see graph below)
• Your average conversion rate
• Your average order value

The formula:

(Keyword search volume X CTR X Average conversion rate X Average order value)

Say I want to rank for 'digital marketing company'.  I'd need to find out how often this keyword is searched for per month.  Ahrefs.com is a great website to find this information.  Their data shows 'digital marketing company' is searched 900 times per month.

Here are the expected click through rates for first to fifth page search positions on Google:

(use the CTR% listed above in your calculations)

Let's consider we have an average conversion rate of 2%, with an average order value of £2,000 per month for digital marketing services.

We want to rank for position number 1 for the term 'digital marketing company'.  And we know from above that it gets searched 900 times a month.

900 x 36.5% x 2% x £2,000 = £13,140

Here is how you break that formula down:

900 x 36.5% = 328.5
£2,000 x 2% = £40
328.5 x £40 = £13,140

We would be looking at £13,140 per month in revenue for 1 sale.

Let's say that is our best case scenario, now we need to look at the other end of the scale.

Say our current position in the search results for 'digital marketing company' is position number 23.

This time we have a CTR of 0.3%, the conversion rate of 2% stays the same, as does the £2,000 per month revenue.

900 x 0.3% x 2% x £2,000 = £108

We would be looking at £108 per month per sale in revenue.

Ranking in position 23 is worth £108 a month, whereas ranking in position 1 is worth £13,140 per month per sale.

The only factors we can't know is how long it is likely to take to move from position 23 to position 1 and how hard it is to rank for that keyword.  This all comes down to the skill set of the SEO manager, strategy and successful execution of the strategy.  This is so much harder to put a figure to.

We could look at the ranking curve by working out the monthly value of each position as we showed in the examples above, then add all 12 months together to get a grand total.  This will then show us how much each position is worth as we move up a position in the search results.  To work out this next section you will have to have done this calculation.

The first 12 months value for one sale a month per year would be £15,876.

If we are paying £2,000 per month over a year for SEO services that comes to £24,000 giving us a loss of -£8,124.

£15,876 - (£2,000 x 12) = -£8,124

However, by the end of year two with SEO fees staying the same, the gain would be £32,640.

You can use the above to work out what SEO is worth to your business for your main keyword and what you can expect to pay for SEO services and ROI over the short and long term.

What is the cost of an SEO alternative?

The best alternative is PPC (pay-per-click) advertising.  It's a better option as you don't have to wait to rank number 1 in the search results.  You can pay to be there the moment your website launches.  But the moment you stop paying your website will no longer rank at the top in the advertising section.  Whereas any improvements the SEO has caused will continue to work for the longer term.

Use Google Adwords free keyword tool to find out suggested bid prices for your chosen keywords.  Sponsored Google ads typically have a lower CTR than organic search results, so let's assume around 5% CTR for our calculations.

Our chosen keyword bidding price is £25.00

900 x 5% x £25 = £1,125 per month ad spend

900 x 5% x 2% X £2,000 = £1,800 in revenue per month

£1,800 - £1,125 x 12 = £675 revenue in the first year. 

So if you are managing the ads yourself, you get a positive return on investment (ROI).

If you are using an ad management company for say £500 per month you can see you will only have £175 revenue left a month, over twenty four months that is going to be £4,200.

Compare this to the figures for SEO services of £32,640 gain by the end of year two.

You'll start making revenue faster with PPC but you will also have more expenses with PPC.

If you want to know if SEO is worth it for your business, identify your search term, run through the equations above and let the numbers help guide your decision.

Further Reading:
Is SEO Worth The Cost For Small Businesses

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