Business investment in marketing these days is increasing, especially in digital marketing.
In fact, for the first time in a decade, marketing growth exceeded 10% between February 2021 and February 2022. According to the latest CMO survey report, marketing spend grew 11.8% compared to the previous 12 months. And it is expected to grow even faster over the next year, to 13.6%.
The digital marketing channel specifically accounts for the largest share of this marketing spend at 57.1%. According to the same report, spending on digital marketing is expected to grow by 16.2% over the next year.
But how much of your digital marketing spend goes to search engine optimization?
In 2019, US businesses spent $73.38 billion on SEO out of a total of $776.3 billion for all digital marketing, about 9.5%, according to a previous publication. report by Borrell Associates.
Those who do SEO internally (at least with local companies) report higher costs and lower returns compared to hiring a consultant and an agency, which results in lower costs and higher returns, according to the report.
According to the report:
“Those who use third parties value the effectiveness of the third party more than their internal ability. SEO and web design/development have a particular penchant for third parties to be more effective.
That said, SEO is an investment in the future revenue of your business. Think about it:
What drives a business is sales. What drives sales are leads. Digital leads come through a website. People find a website through impressions in search results.
SEO allows businesses to own the top of the sales funnel – the impressions of your website in search results. And, some sectors find organic search generate 2 times more income than other channels.
So what determines your SEO budget? I’ll touch on that later.
Factors that determine your SEO budget
What percentage of your budget should go to SEO?
It’s not black and white, but the following factors should determine how much you invest:
Your incomeYour competition
1. Your income
I recommend that the greater of $8,000 per month or 5% to 10% of your business revenue go toward SEO. In a highly competitive space, you should lean towards the high end. This is what you will see for companies that want to compete seriously.
Spending at least $8,000 per month usually allows for a good starting point with extensive expert resources. At the high end, we have customers six times a month.
Also, consider how much money you spend on paid advertising. For example, a national brand running PPC campaigns to attract new customers should spend approximately 25% more on organic SEO. The two channels complement each other to help drive website traffic.
I think it’s helpful to say that 25% of PPC spend, or at least $8,000 per month, is a reasonable estimate of SEO spend for businesses using ads.
2. Your competition
Note that most search engine queries return at least a million search results. And you must be on page 1 to import.
Any company that competes in organic search has its work cut out for it. But, if you’re in a tough niche or going up against big brands with bigger budgets, you might need to work a little harder and faster.
This often requires an increased SEO budget. And you have to be willing to do that or risk being irrelevant in search results.
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How to decide on your SEO budget
So you know that two basic factors influence your SEO budget: your revenue and your competition. Let’s put this into perspective.
We know there is a lot of competition in search results. So the question isn’t just, “How much do you want to spend on SEO?” But also: “How fast do you want to beat the competition?”
this it’s really what determines your budget. At a minimum, you should spend 5-10% of your revenue on SEO. But if you want to move faster, you usually spend more.
This doesn’t mean blindly investing in SEO with the promise that more money = better results.
But you need resources. You need to know who you are hiring and they should have an excellent reputation and experience.
If you use a third-party SEO agency, make sure you only hire experts. Unfortunately, many companies settle for cheap SEO services. Cheap SEO is a near-death experience, and it will cost you more time and money to dig yourself out of the grave you’ve dug than if you were to invest in a healthy SEO strategy up front.
With a good budget provided by a true expert, you can learn how to make the most impactful SEO moves with the resources you have. And if you can be more nimble than the competition in making these changes, you have a better chance of getting ahead.
If you can, take advantage of dips when possible. Those who don’t have the knee-jerk reaction to budget for digital marketing when the outlook is shaky will have the opportunity to rise above and outperform their competition.
Consider diverting budget to SEO
If your marketing budget is already maxed out in other channels, consider diverting some of your budget to SEO.
For example, let’s say you spend a significant amount on PPC ads. Cutting 5% to 10% of that for SEO shouldn’t be a problem.
Especially if you think about how SEO beats PPC in average conversion rates, you’ll thank yourself later. Also, SEO has the power to maintain your brand presence online. The same cannot be said for ads: if you turned off your advertising tomorrow, you would have no residual value in search results.
SEO is more profitable in the long run because your optimized web pages can continue to generate traffic for years.
Yes, you need to keep the leads coming in today (whether through PPC or something else), so I’m not suggesting you shut down those activities. But if you have a good flow of leads coming in now, invest some of your budget in the future and SEO will get you there.
The views expressed in this article are those of the guest author and not necessarily Search Engine Land. Staff authors are listed here.
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About the author
Bruce Clay is the founder and president of Bruce Clay Inc., a global digital marketing optimization company offering search engine optimization, PPC management, paid social media marketing, SEO-friendly site architecture, content development and SEO tools and education. Clay authored the book “Search Engine Optimization All-In-One For Dummies,” now in its fourth edition, and “Content Marketing Strategies for Professionals.” He wrote the first web page analysis tool, created the Search Engine Relationship Chart® and is credited with being the first to use the term search engine optimization. Bruce Clay’s renowned SEO training course is available online at SEOtraining.com.
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