This is an exceptionally tricky post to write. So many of the elements and factors that go into the equation are situational, contextual, and conditional. I’m not going to be giving any hard and fast numbers here. Instead, I’m going to share with you the things I factor into my own assessments so that you can create your own ‘formula’.
The ‘Bookends’ of SEO Investment
Even though I’m putting this entire article into a ‘sliding scale’ system, with relative values rather than absolutes, we can still be clear about what investment is too little, or too much.
At the lower end of the spectrum, the investment must be enough to actually count. The minimal investment is zero, but that won’t get results, and thus cannot be realistic. Investing budget to raise your search position from 18 pages past the point people stop clicking on results, to just 1 page past the point where people stop clicking on results is still not getting clicks, and thus still worthless. Unless the end result is a positive return on the investment, it is not realistic on a pragmatic or practical level.
At the upper end of the spectrum, we have to account for the point of diminishing returns, the profit margins involved, and generally the expected ROI (Return on Investment) specific to the campaign. The word ‘Optimisation’ is something that is always important, and we should always seek that precise level where we get the most overall bang for the buck. The exact place where you find that sweet-spot varies, but you know it when you find it.
What Makes an Investment Too Low?
Well, the most obvious factor here is what your competition are doing. If you have 10 competitors all investing significantly on their own SEO effort, in terms of cash, manpower, and/or commitment, then that naturally sets a competitive baseline.
Now, you can of course play with the mix. Your competitor may invest more cash than you, but if you make up for the difference with commitment, innovation, etc. then you can still compete well. But if you allow a competitor to beat you on all parts of the mix, your only realistic hope is to consolidate your minimal investment into a single, small point of focus. To go niche and win just in that niche while their resources are spread across the board.
You can have a look on jobs sites to see if any companies in your general industry are investing in hiring in-house SEO, or see who is spending on AdWords, and these are both signs that your industry is investing in search, and that you’ll have some tough competition. If your niche/industry is competitive, you have to be realistic and face the fact that hiring an agency to put one person on your case for one day per month is never, ever, going to outperform the dozen or so competitors with entire, full-time, in-house teams on their case every day.
A good SEO consultant or agency like All Things Web® will almost always offer you a full audit at the commencement of a campaign, and the option to include competitor research. These will provide additional insights into what sort of investment your competitors have made, or are currently making, and compere these to your own resources, helping you map out exactly what you might need to invest.
What Makes an Investment Too High?
This one is simpler. Profitability. A lot of things in search marketing generally have a high return on investment. Over the course of six months, you put X amount in, and you get Y amount out, where Y is usually at least 200% of X, and may be far, far higher. It is kind of like buying £20 notes at £10 each. The more of them you buy, the more profit you make.
However, we can carry that analogy further without any loss of accuracy. Usually it only scales so far. At a certain point, they run out of local supply of paper or ink to make those £20 notes, and have to import them from further away, and the further they have to go, the more the price increases. Likewise, with SEO, at a certain point you’ve taken all the low-hanging fruit such as the longer-tail keywords, the highest value conversions, and are having to work harder and more expensively for each further gain.
This is why any good SEO agency or contractor will almost always advise you to work on your conversion rates early on, massively extending the profitable margins for every other part of the work.
As far back as the latter 1990s, I was pointing out that the easiest way to double your profits from SEO is to go from a 1.5% conversion rate to a 3% conversion rate, rather than just attempting to draw twice as many targeted leads. If you then can double your leads as well, you gain a quadruple return, rather than mere double.
Expectations and Returns of SEO Investment
One cannot assess the ‘realistic’ aspect of an investment in SEO without factoring in what one expects to get as a return for that investment. SEO investment in areas designed to drive sales, often in the latter-stage searches of the buying process, using long-tail keywords are more solidly tied to a direct return than branding campaigns.
Branding campaigns may include things one might otherwise call ‘vanity phrases’ or positioning the company as a leading brand for ‘head’ terms that are very early in the buying process, and require far more long-term strategy to carry a visitor to conversion, but may sooner pay off in terms of negotiating with suppliers. Branding campaigns can be harder to tie directly to sales and monetary results, but tend to be ‘the rising tide that lifts all boats’ in an overall marketing plan.
Creating the Formula
Start with an assessment of the competition. Your minimum investment needs to be sufficient to either beat them generally, or at least to beat them in one specific area of focus. So, a site selling office furniture may not be able to compete on a phrase as competitive as ‘Office Chair’ against the likes of Ikea, Amazon, Argos, Staples, where brand can be such a critical piece of such a generalised search, but may put all its resources into one area it is particularly strong, such as ‘Height-Adjustable Desks’.
The maximum investment is always related to profit and return, so monitor carefully, and focus first on the areas where the profit margins are largest, but the niche is small enough for the competition to be lesser. Increasing the conversion rates, and focusing where profit margins are most generous will help extend the viable ceiling of investment.
Hopefully, these pointers will help you to assess what makes for a realistic investment in search marketing. If you need some expert assessment and pointers, however, feel free to contact us here at All Things Web® and ask about our professional services and help.