SEO vs PPC
Our guide to SEO versus PPC issues has often been described by experts as the best on the web. Even after many years, no one has done it better.
PPC and SEO - the Pros and Cons
When, where and how to spend money on marketing and related areas is a crucial question for online business because it relates strongly to ROI or return on investment - maximising results, and results against cost. The big topic is search optimisation versus pay-per-click advertising although there are other aspects to look at.
The truth of course is that both are required, because all income streams need leveraging, but the question is how much to spend on each and how to do it - and especially when. A good way of looking at this is to define the two approaches as being on the one hand a quality, technical and efficiency exercise, on the other a marketing approach. The right answer is to use both, although it is almost always a question of economics: the best use of limited resources. SEO gets visitors from search engines and other web sources, PPC from direct advertising; and SEO helps with conversions. It's all part of marketing efficiently.
Looking at the areas each covers, we see that each has specific advantages and disadvantages.
- Firstly and most importantly, SEO is a quality-improvement exercise. It has no real value if it is not based on this.
- SEO sorts out the website, resolving technical issues with the server or site code.
- SEO provides traffic by organic ('natural') promotion and optimising all of the on-site traffic-generating factors.
- SEO creates web-wide visibility and helps brand strength.
- SEO gets the search engines to send you free traffic. Improving quality will score well here.
- SEO increases conversion rates by improving on-site factors such as usability, credibility and marketing.
- The ROI from organic SEO is unbeatable - when done right.
- There is a built-in timelag of from 3 weeks to 4 months for first-stage results, then several months later for second-stage gains.
- SEO is very slow when compared with PPC - or at least the best SEO is.
- SEO is a waste of money when done wrong.
- Bad SEO hurts the site and the business.
- Site owners usually recognise they don't know how to solve server technical issues, code htaccess files or manage a link-building campaign, and leave it to the experts.
- PPC (and other marketing) gets traffic in by advertising.
- PPC gets results fast - often within a week or two.
- PPC is fast and easy to target, for the experienced.
- PPC provides fast data on many market factors.
- PPC is quick to re-target, and agile in many ways.
- PPC is the fastest way to lose money when badly run.
- PPC adverts may have some restrictions, in some markets
- Site owners often believe they can do PPC - but tend to do it badly unless they have had professional training.
CPC and CPA
Paid advertising includes PPC and banner adverts. PPC is one form of CPC or cost per click advertising: you pay the search engine or other publisher for each click on your ad that leads to a visitor being directed to your website. Banner ads are often CPC-type as well: the customer clicks the advert and is sent to your site.
CPA adverts are cost per action, and refer to affiliate ads and similar. If/when the customer buys, the advert publisher gets a percentage that you have previously agreed. Your PPC consultant will generally advise on the various types of advertising.
When to use SEO
At the start of a web campaign, SEO is vital, even if PPC is used to generate fast income. This is because a website may have errors and sub-optimal factors such as:
- Server errors
- Poor code
- Poor content
- Badly-targeted text
- Credibility issues - customers may not have confidence
- Usability issues - many sites out of the box are much harder to use than they should be
- Poor on-site marketing
- Inefficient conversion incentives
- Insufficient links
This means results from natural traffic sources cannot be optimal, either in terms of traffic, or conversions. Search engines don't send traffic to sites with few links, bad code, and poor content. However, if these factors are improved, then organic traffic can be improved dramatically. For example site visits can easily be multiplied by 200%, and there are plenty of examples of a factor-10 increase.
If the site does not appear a credible and reliable source of the product or service marketed, or is hard to use, or markets its service poorly, then traffic is essentially wasted as there will be a low conversion ratio - the percentage of visitors who sign up or buy. This also affects the PPC results.
Therefore SEO has to be seen as a vital component. Spending 75% of the budget on PPC in Year 1 or Year 2 is not optimal use of funds. However, in Year 3, this balance looks a lot more accurate - as the site should have been fully sorted by then. SEO in Year 3 should be a tuning process without major costs, unless the site is very busy and/or has a high content turnover.
Even when SEO projects are completed and consultants leave, revenue will continue to rise for around a year. Substantial income improvements usually continue to accrue because the timelag is as much as one year for 'second-stage' gains, i.e. those that occur when full web visibility finally propagates. After 12 months or so, gains level out, and may then drop around 10% before stabilising.
When to use PPC
There are two periods when high PPC spend is justified - at the start of a web campaign when there is zero organic traffic, and in Year 3 onward when the site should be able to stand on its own two feet.
In the interim periods, sufficient funds must be allocated to organic traffic generation and site improvements.
What is SEM ?
Search marketing (Search Engine Marketing) is a PPC plus SEO approach: i.e. paying for PPC and other ads plus a minimum of on-site work. Agencies who specialise in this method normally allocate about 75% of the spend to PPC. However we have often seen this with a 95 - 5% split. Sometimes it is simply executed as a PPC plus link-building approach.
We would argue that the best ROI is achieved initially by applying most funds to website improvements. A fully-optimised website generates its own traffic both this year and the next, virtually on autopilot. However, it requires easily the most skill of all, especially when CMS and ecommerce applications are used, since only a tiny percentage of SEO personnel are competent to work with them.
What is SMO ?
Social media optimisation is a marketing area that has grown in importance in recent years. It refers to all aspects of community and peripheral market influence such as Twitter through to blogs. All businesses will need some sort of policy in this area, although SEO and direct marketing are almost always much more important.
PC vs Mobile
In 2014 the number of mobile devices accessing websites exceeded the number of static computers for the first time. Inevitably this must affect marketing since you have to ensure that (a) your service presents strongly to mobile users, and (b) your service works for people using a tiny screen. There are some major challenges here because your offering must look reasonable on a 24-inch screen and a 4-inch screen, and this is easier said than done. Perhaps your service is more applicable to those using mobiles and this may make choices easier.
Balancing PPC vs SEO spend in Year 1
This is the most important issue - how to reconcile the two problems: no organic traffic and no website income.
PPC can create results in a week or two, so it is a fast and accurate income generator. There are two factors to consider: targeting and ROI.
A PPC advertising campaign must be well-managed or it can simply be money down the drain. You can spend large sums and see little return, unless your ad campaign manager knows his subject. For this reason it can be a mistake to manage your own large PPC spend unless you have plenty of time to devote to research, training, and campaign management - which does not apply to most business buyers. However the risk with small campaigns is lower so many site owners try to run these in-house.
A $100 a month campaign can be outsource-managed for $25, a $5,000 a month campign for $400. This looks like value for money. Skilled PPC managers don't waste money, they have already made most of their mistakes.
The worst-run PPC campaigns just break even or get a negative ROI, that is, you spend $1,000 and get back the same or less. This is common in self-run PPC campaigns.
The return on investment for PPC is of the order of two or three to one - less for poorly-managed campaigns or tough markets, more in weaker markets and when managed optimally. So you should expect an average of $2,500 worth of business for an outlay of $1,000. This is a good way, when managed correctly, to generate early results for a new website or one that is now being actively promoted. In some circumstances the ROI may be as high as four or five to one.
And when the site and organic traffic are fully optimised, putting the budget into PPC is a good move. A good site will be able to maximise PPC conversions.
SEO in Year 1
However we need to work on the site and on organic traffic in Year 1, as well as creating income via PPC. If the site itself is poor then even PPC may be inefficient as people don't buy from poor resources.
There is also the factor that ROI from search optimisation - meaning all on-site and off-site improvements - is unbeatable when done well. A five to one return is the minimum expected; a ten to one return is the norm; and twenty to one is not uncommon. Every $1,000 spent on organic SEO should generate $5k to $20k return.
There is a limit to this of course, the graph climbs steeply for a while, then starts to flatten out. At one year in, revenue increase will have finally maximised if the project has finished.
In Year 2, SEO still provides good returns even for smaller sites or those with a narrow market target - a 5:1 return or perhaps better can be expected. Busy sites with a wide market to cover have a much wider range of possible SEO goals though, and investment can still generate excellent returns.
As examples of return on investment for SEO, take these two cases:
- Company A, with a budget of $5,000
- Company B, with a budget of $250,000
Company A spends $5,000 on SEO in Year 1. Their return should be a minimum of $25k, and may be $50k or more. Returns are lower for firms in a small niche, higher for those with a wide target and more funds to attack the market. A budget of $5,000 is fairly low because the wide range of tasks needed for action in Year 1 means that the focus is probably spread too wide. This means that a 10:1 max return is probably a good estimate. On the other hand this can easily be maintained in Year 2 - and perhaps even bettered, as basic site repairs will have been finished. A $5,000 budget will be insufficient for many sites as there will be simply too much to do, especially as regards site work since costs in that area may not be small. Therefore a $10k Year 1 budget is more realistic for the average small business website.
Company B spends $250k.This type of spend is not typical except for large firms in a market with high returns. Assuming the product/service allows for this, their return might be as high as $5m, because this budget allows for just about everything to be fixed and a wide range of targets attacked. Of course, the market has to be wide enough to allow this, and there has to be enough depth in it to take that revenue off competitors. And of course there needs to be a lot of machinery in place in order to service a $5m increase in business.
Site repair issues
With a new website, or one new to the idea of active online marketing, it is almost guaranteed that the site will need work. This is because sites are not built with either quality or search success in mind - they are built to fulfil a brief and to look good. Neither of these help much in the origination of revenue streams.
In the worst case a site will need extensive work, a rebuild, or perhaps a new web application - even if a brand new website. Far too many businesses buy a site then ask their consultants to generate income from it. It cannot be emphasised enough that this is the wrong way round.
Some sites are built right, but perhaps less than 5% in total. This is an indictment of the quality prevalent in website construction. Web developers are not commercially-oriented and it would pay web services buyers to remember this point very well.
Bad website faults
In many cases it will be found that a website has been built with numerous integral faults of a kind that pose problems with search engines as soon as they are seen. These faults result in what is called a 'search penalty': your keyword results are automatically placed 30 places below their natural place. This is disastrous for results, and caused by site implementers who put clever coding above basic quality and honesty. For example you might see keyword stuffing, 302 redirect errors, incorrect use of links, links to poor-quality resources, bad page navigation errors such as the use of images as main links, really poor navigation structures, code validation fails on a massive scale, poor accessibility score, and a thousand other problems integral to new websites. This type of problem is very common and among the first tasks your SEO consultants need to resolve; new sites are remarkable for their lack of any quality control and quality score signoff.
We must also add the new layer of website fails: poor or zero legal compliance. Sites are subject to laws and regulations now, but this appears to be news to many implementers. Again this is an SEO fix to add to the list. You can consider the SEO consultant as the final quality control inspector who was clearly not in the office on the day your website was signed off - and this work can amount to such a significant volume that you might even be told to give up and start again.
It can be a cheaper option to start afresh, this time using a contractor who has some modern knowledge of web business. A job starts with Quality as the foundation; it is then tested against well-known quality score measures; the 'snagging' is done (a term from the building trade meaning fixing small issues that are by no means related to the major elements of design & build); and the job is signed off. If the web designers don't work in this way then you probably have little chance of getting a good start in online business.
There is a timelag in all organic work that means results are not seen for an extended period, compared to PPC spend. The shortest possible timelag is 4 weeks, which can only apply to an established site with good links and a good traffic base. In this case, site changes will be indexed in 2 or 3 weeks and the commercial results might then be seen in as little as a month.
However, many sites are established, but have low traffic or insufficient links. If links are needed then this type of site has the highest timelag of all, which may be several months. This is because a link campaign has to be organised, then implemented, then search engines must index the links, then they must process them throught the algo, then the site must rise in the SERPs, and only then can results be seen. And, in addition, SEs regard established sites with few links and low page rank as the least valuable sites of all - they are deemed 'proven of low value' because no one is linking to them and they have little traffic. It takes time to change their inbuilt prejudice against these 'worthless' sites.
In contrast a brand new site can be placed well, quicker than this, as it receives a 'news boost' for two months from the search engines. As long as new content and new links are gained strongly during this time, it will place comparatively well and then stay there. This approach requires a very pro-active project, though, and costs are higher.
The best quality of SEO is secure, stable and steady. And steady means slow.
The 'Google page 1' offer
You will often see SEO operators offering a Google page 1 placement for your keywords. There are some issues with this type of offer that are too extensive to go into here; but the basic premise is in any case faulty. Placing at #1 to #4 in the SERPs creates traffic, results and revenue, but placing at #9 or thereabouts is not going to show up on your balance sheet. You should probably consider the implications of that.
Choice of search consultants
Hiring the wrong contractors can be a big mistake, as there are more snake oil salesmen here than in pyramid schemes. In addition, there is a class of approach called 'black hat SEO' that infers the use of rapid-result and other unethical methods. If these are used, a site can do well for six months, then crash totally when search engines discover that dirty tricks have been used. Recovering from this may not be straightforward and can take 18 months - we have much experience of the remedial work necessary.
The opposite of black-hat SEO is ethical or 'white-hat' SEO. Subdivisions of ethical SEO include server improvements, site improvements and link equity gains. There are plenty of ethical ways to improve link equity.
The different approaches to SEO
There are all sorts of ways of doing it, ranging from SEO computer programs that identify issues for you so that you need no knowledge of the subject, through to experts who seem to use more art than science. These methods can all work as long as they are ethical, that is to say honest improvements. Some SEO consultants don't know much about server technical issues or database-driven site issues, as there generally aren't any classes for learning these topics; it's not hard to learn how to fix obvious site issues but this is only a fraction of the task.
There are two serious shortfalls in website quality that you will encounter:
- CMS and similar applications of terrible quality below the surface
- Implementers who have no idea what a quality approach means
Database-driven apps, also known as dynamic apps, have many hundreds more issues than plain HTML sites. In particular, their developers often have no experience of web standards, compliance, validation, search engine requirements, or any other modern quality measures. They just write code and appear not to care about anything other than features and looks. The resulting websites typically have appalling validation and accessibility scores, which along with other quality fails mean that your site does not check the boxes for quality and can never achieve optimal organic traffic. ('Organic' means natural, resulting from normal web visibility, not bought and not synthetic in any way.)
Therefore it is very common to find all types of DB-based websites with a ton of problems. They may look pretty and appear to do the job required - but they will never allow your business to achieve top scores in any area related to quality, and this directly impacts organic traffic.
This problem is magnified by implementers who have no idea about quality and probably don't care anyway - as long as the site looks good and fulfills the brief, it's job done. These sites can never achieve the potential the business may deserve.
Quality: the big issue in SEO
Virtually anyone can learn how to do SEO. However, there are many different ways of going about it, and different levels of competence. In our view, about 50% of the advice seen on SEO forums is inaccurate and some is just plain wrong. The hardest part is to combine server technical work with CMS or ecommerce technical work and organic SEO - there are not many people who have this level of competence, and few at the top level.
The most critical factor in SEO is quality improvement, although few operators seem to appreciate this. With a small budget this factor is the most important by far. If it isn't based in the first place on improving quality, we don't see the point in it; better to spend money on PPC or other forms of marketing. Cheap SEO might be worth the money - i.e. not much - but equally, it might cost in the long run.
Pay-per-click adverts produce revenue if the site looks good and while the funds are injected. If the website does not inspire confidence then results are self-limiting: clients must be able to trust you based on first impressions, and customers do not buy from amateur-looking ecommerce sites or sign up with service providers who have amateurish websites.
PPC creates returns as long as you keep paying every month. Turn off the tap and the flow stops.
The PPC hard limit
There is usually a top limit for PPC spend in any given niche, as the buyer volume is limited. There will also be an optimum max spend, which will often be around half to three-quarters of the hard limit. In other words, spend $1,000 a month on PPC and get $3k back; spend $2k and get $4k back; spend $3k and get $5k back; spend $5k and get $6k back; spend $8k and get $7k back, losing $1k. The optimum monthly spend in that niche, then, is probably around $3,000 a month. It doesn't get as good a percentage return as smaller spends, but it takes cash from your competitors and reduces their revenues. A higher spend is more an attempt to lock out rivals than a good ROI decision.
The time input to get it right is high for the inexperienced, and the cost of learning needs to be factored in. At first the newcomer will target the wrong keywords for the spend, and will pay too much for clicks. However, do-it-yourself PPC is usually more effective than DIY SEO because it is a smaller and simpler field, and quicker to learn.
No online business can achieve its potential without the use of analytics. A start-up should consider a complete re-work of their approach after two months when the web analytics tells them what is actually happening. Established businesses need to make constant changes informed by their analytics. Some people consider the analytics tools more important than SEO or PPC, though it is hard to get any results to analyse without them.
Most people today use Google Analytics as it is a very competent free service. Its principal advantages are that it is free, and competent, and easy to set up. Its disadvantages are that being a pagetag system it cannot identify much in the way of server errors, and it does not have the sophistication of advanced systems. The best systems of all are installed on-server analytics. These are all commercial, although they can be very economical. Top-class analytics apps on large sites often create a significant server load, so a separate server may be needed just to run the analytics; but this is not a problem for high-traffic sites as the revenue is there to pay for it.
If you are trying to balance SEO, PPC and website work costs without basing the decisions at least in part on what your analytics is telling you, then you probably need to re-think your approach.
PPC, SEO, and your $ - the round-up
It can be seen that both approaches are needed. The key is when and where to spend money and what proportion of the budget to allocate to each at a given point in time.
There are good providers, and the less good - caveat emptor. When choosing an SEO provider, it is probably a good idea to find one that is very high in the search results for their chosen terms, and has been for more than six months. After all, this is basically what you will be asking them to do for you - so if they can't do it for themselves and have to advertise instead, you can probably figure they are not great at what they do. An SEO provider that needs to use PPC to get work is something of a contradiction.
PPC campaigns look simple but aren't. Learning how to run them costs somebody somewhere a lot of money. If you had to pay an expert 25% of your spend just to manage it correctly, that wouldn't be a bad deal - but luckily it costs a lot less.
Don't forget that decisions have to be informed by data from the web analytics. A business that doesn't use these tools is virtually blind. There is a school of thought that you are better off with a really good analytics person and less capable SEO and PPC staff than the other way round, and it is a valid opinion. At some point every business will probably want to move away from a free service to one that targets their specific goals better, and part of that process is to learn how to use the tools to their maximum capability.
At Lordprice Web Development we don't do PPC, as we are web technology and organic / technical SEO specialists, and only as part of our management or implementation projects now, so we partner with experts who specialise in per-country and per-budget PPC management together with specialist web analytics consultants as needed. We would tend to look unfavourably on persons who claim expertise in technical SEO, general SEO, all aspects of paid marketing including PPC, and web analytics. We have never heard of anyone yet that might qualify - and, after all, we beat people every day who claim expertise in everything. Specialists do the best work now as it is long past the day when one person or firm was the world's best in everything, and it's worth remembering that.