Google Adwords vs SEO: Comparing ROI
Apples to Oranges
Though the debate over which traffic method is better has been raging since both Adwords and SEO became mainstream, some may argue that it’s the classic case of trying to compare apples to oranges. Adwords is an easily measurable traffic generation system with exact data sets that allow you to determine your direct ROI from ad to sale with speed and relative ease, for this, there are plenty of reasons to leave adwords to the pros instead of doing it yourself. SEO involves a wide range of factors, not all of which are known, and may take months before you see any traffic directly related to your efforts.
However, what nobody can argue is that both are potentially fantastic sources of qualified traffic that when combined with the proper sales funnel can be extremely profitable. That’s why it’s important for you to get a general sense of what kind of ROI you may be able to expect if your campaigns are successful. But, instead of just talking about the economic factors, it’s also helpful to discuss the time it takes for your investment to mature. Let’s start with the time investment for each.
Adwords vs. SEO: Time
In general, seo optimization services is considered a long term strategy that requires at least a few months before you begin to see your site ranking for your chosen keyword phrases, this if you use a company like the Atlanta SEO company if not, it will take longer. This of course depends on your particular market and the difficulty of each term. For example, trying to rank for corporate attorney is probably much more difficult than trying to rank for Santa Barbara corporate attorney because the former is on a national scale and the latter is much more niche. In both cases however, you are probably looking at a minimum of 3 months before you begin to crack the top 20.
Those 3 months would be spent creating unique content for your site, optimizing your on-page factors and looking for quality backlinking opportunities. It would also involve analyzing your competition to see what other terms they currently rank for and how much traffic you can estimate that they receive from each keyword to gauge whether or not you should target those additional phrases. A properly run SEO campaign can easily cost you between 20-40 hours per week if you want to increase your chances of obtaining and maintaining your rankings.
However, according to the Digital Marketing Campaigns – Fannit once you break the top 3 for your desired search term, you can expect a big spike in traffic (depending on the monthly search volume of course). For our example, the term [corporate attorney] gets 880 exact match searches per month.
Depending on which study you read, the click through rate (CTR) for the first position in the Google results can be between 34% and 53%. That means that ranking number one for [corporate attorney] could translate into between 299 and 466 clicks to your website each and every month. That’s a pretty healthy traffic gain on what is most certainly a lucrative phrase. The best part of SEO is of course the ability to maintain your rankings through ongoing, though in most cases less than the initial, activities.
By contrast, Adwords is essentially like turning on a traffic faucet. You design your ad, set up a landing page and click the start button. Once your ad is approved, traffic begins to flow. Most intermediate to advanced users can have a full campaign researched, organized and running within a few hours. In truth, most of your time investment in Adwords will be analyzing the data to dump non-profitable terms, optimizing ads to get higher CTRs and optimizing landing pages to improve conversions. Unlike SEO, every action you take in Adwords will have an almost instant and measurable effect on your campaign.
Because of that fact, the time you need to produce an ad that can generate clicks is much shorter; hours vs. months. However, the industry average CTR for an Adwords ad is somewhere around 2%. That means that for the 880 monthly searches conducted in our example, you’re only going to generate about 18 clicks. It’s for this reason that most Adwords campaigns tend to include 100’s if not 1,000’s of words in order to produce enough volume to make it worthwhile. What you gain in speed and agility, you lose in volume per keyword.
Adwords vs. SEO: Money
For some reason most gurus with a course to sell like to call SEO “free traffic.” After reading my extremely brief description of just how much time is involved in proper SEO, hopefully you will agree that it is far from free. In fact, doing SEO through a firm could cost you in excess of $100/link if the firm specializes in high quality and sustainable link building practices.
**Side Note: The biggest thing to remember here is that building cheap links could give you short term gains, but will leave you vulnerable to the next Panda/Penguin-like algorithm update. That’s why it pays to invest the money upfront and set yourself up for long term success.
The upside of SEO is that when done properly, especially in markets where the competition is not SEO savvy or engages in SPAM link building, is that once you’re in the top 10 you’re pretty much going to stay there. That’s assuming that you continue the practices that got you there of course (quality link building, unique content, frequent updates, etc.).
So how much money are we talking about?
According to an industry survey on the cost of SEO services, you should be able to find a firm that will work on monthly retainer. The survey cited $251-$500 and $2,501-$5,000 per month as the 2 most popular price ranges, 13.8% and 11.3% respectively. So for our example of corporate attorney, let’s assume that it would take 8 months of work to make it to #1 (purely speculative for example purposes). Being a law firm, we find an SEO firm of reputable quality that charges $4,000/month. Our total investment before we began to see those 299 to 466 clicks per month would be $32,000.
That sounds like a lot, but how much is each new client worth to a corporate attorney? A quick Google search showed me that Bruce Leanoard Beal Business Attorney charges a minimum of $2,000 for a 10 hour per month retainer and David Weilbacher Attorney and Counselor has a comparable service for $1,080. That averages out to around $1,500/month. The average number of clicks according to organic CTR studies is 382 ((299+466)/2) and we can assume that they will get at least a 1% conversion (let’s hope so anyway). That would be an average of around 4 new clients per month so they would gross $6,000 (4*1,500=$6000) for a monthly profit of $2,000 ($6,000 – $4,000 for SEO fees). Looking at it from a different angle, not counting the initial investment, it would cost you around $1,000 per new client.
Take a breath before you say how horrible that is for the ROI of SEO. Don’t forget that an SEO plan should be tackling multiple keywords at once. Each one will have its own time to rank and traffic value. The $6,000 we calculated was the result from a single phrase! When you look at it like that, it’s very difficult not to lean towards SEO as an amazing traffic source.
The value on a per keyword phrase basis is incredible when compared to Adwords. That same phrase in Adwords has a cost of $8.77 per click:
We already calculated that you would get an average of 18 clicks per month so your total monthly spend on that phrase alone would be around $157.86. If we assume the same 1% conversion rate then it would take roughly 5.5 months between conversions and would cost approximately $877 per new client.
Don’t forget that our SEO example was only 1 keyword phrase among many (between 8-12 is normal for large projects). The Adwords calculation is what it would cost you to get one client period. From there you would have to find additional phrases and pay for them accordingly.
But Which is Better for ROI?
Ultimately that answer depends on too many individual factors for anyone to make a blanket statement with any kind of certainty. Your budget, your market and your brand all play key roles in how you should plan your marketing. Ultimately it shouldn’t come down to making a decision about which one you should do, but rather which one you should do first. Trying to run your business on just one traffic source is exactly like putting all of your proverbial eggs in one basket.
Anything could change overnight. The keywords you were ranking for could suddenly drop dramatically. The ads that were bringing you in the most money could suddenly be deemed inappropriate because of some new Google policy change. You need to use both SEO and paid traffic as complimentary traffic pillars or risk disaster.
Whether you choose Adwords or SEO first depends on how quickly you want/need to see results. However, the learning curve to Adwords can be extremely steep and your investment can quite literally evaporate overnight if you aren’t proficient at the intricacies of keyword selection and sales funnel creation.
SEO tends to be more forgiving and as long as you are focused on building quality links, you can never really go wrong. Once you have SEO traffic and you can identify which keywords lead to the most conversions, you can build Adwords campaigns around those words in order to boost your immediate traffic while you wait for your rankings to reach #1. A good idea would be to check the indexsy list of best seo companies just in case you have the need of some professional help, in this list you will only find the best ones.
The ROI for both will depend a lot on how much you know about each in order to do everything quickly and correctly by yourself or at least know enough to hire the right people to get the job done (time). It will also depend on what kind of long term budget you have for your marketing and how much each channel needs to make (money). In the end, only you can decide which is right for your business.
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