| SEO vs PPC |
SEO vs PPCWhat are the pros and cons of SEO against PPC? Search optimisation versus pay-per-click advertising is a crucial question for online business because it relates strongly to ROI or return on investment - results against cost.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. One way of looking at this is to define the two approaches as being on the one hand a technical and efficiency exercise, on the other a marketing approach. The right answer is to use both. SEO gets visitors from search engines and other web sources, PPC from direct advertising. Looking at the areas each covers, we see that: SEO:
PPC:
When to use SEOAt 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:
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, ie 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 PPCThere 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: ie 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 by applying most funds to website improvements, initially. 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. Balancing PPC vs SEO spend in Year 1This 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. Targeting 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. ROI 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. 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 1However 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. 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. SEO negativesSite repair issuesWith 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 revenue creation. 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 existent in website construction. Web developers are not commercially-oriented and it would pay IT buyers to remember this point very well. SEO timelag 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. 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. PPC negativesPay-per-click adverts produce revenue if the site looks good and while the funds are injected. Turn off the tap and the flow stops.There is usually a top limit for PPC spend in any given niche, as the buyer volume is limited. In other words, spend $1k and get $3k back; spend $5k and get $10k back; spend $15k and get $12k back, losing $3k. The time input to get it right is high for the inexperienced, and the cost of learning needs to be factored in. Do-it-yourself PPC is about as effective as DIY SEO - ie not. PPC, SEO, and your $ - the round-upIt 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. 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 it, that wouldn't be a bad deal - but luckily it costs a lot less. At Lordprice Web Development we don't do PPC, as we are organic SEO and web technology specialists, so we partner with experts who specialise in per-country and per-budget PPC management. We would tend to look unfavourably on persons who claim expertise in technical SEO, general SEO, and PPC. We certainly never heard of anyone yet that might qualify. We beat them every day in the search game, after all. |