SEO vs PPC? Time To Compare Your Business Costs
Was I too late there? Sorry.
Now that’s cleared up, we can discuss the only question which bears any relevance to business owners.
Which strategy is better
Which strategy costs more, and which provides the greatest return on investment?
Now we’re talking.
PPC Is The Business Owners’ Favourite
PPC is typically the business owners’ preferred choice due to quick impact, no-nonsense upkeep and no-fluff results. However, these benefits come at a price.
Let me explain:
Constant spend is necessary, with no lasting effect. Your money is pumped into a bottomless pit, swallowed for eternity by the Google behemoth (along with any other paid networks).
Yes, the results can be, and usually are very fruitful. But if pay-per-click advertising was a phrase, it would be ‘Nothing lasts forever’.
In addition to this disadvantage, highly competitive markets can demand anywhere between £50-£100 per click.
That’s a whole lot of money.
However, even at the exaggerated top-end scale of £100 per click, converting 5% of 10,000 visitors at a value of say £5,000 each equates to a resolved issue.
The ROI to this business model still arrives at a whopping £1.5 million.
But don’t get blown away.
These figures are incredibly dreamy. Not every business gains a 5% conversion rate or generates such a high customer value.
Focusing on your specific industry and business model is vital to gauge the cost effectiveness of pretty much everything – apart from perhaps how far your alcohol spend went at the Christmas party…
Comparing ROI To Save £££££
The idiosyncrasies of PPC and SEO are both akin and disparate.
Both strategies involve targeting keywords. But the methods to achieve success demand entirely different approaches. You can’t pay Google money to list your organic result at #1.
Unless, you have a bribe big enough.
(Don’t quote me on that).
So how do we comparatively measure cost effectiveness?
It’s not so difficult this way.
Reduce each channel to 3 key metrics:
- Cost per Visitor
- Cost per Conversion*
- Total Average
Using these 3 metrics it will soon become clear what channel needs reigning in and which need more worthy investment for your business.
Here’s how to do it:
This formula will provide a top level analysis of your best performer for the lowest spend.
*The definition of a conversion will differ dramatically from business to business. Remember, your conversion rate should be based on true conversions – how many of those potential customers acquired turn into paying customers or clients? These are the top-level figures which matter.
A real world Example
The below example is one of our active clients. You can see that organic cost-effectiveness is greatly outweighing that of their PPC campaigns, to the point where PPC conversions demand 3x more spend for the ‘same’ results.
SEO projects also favourably produce results which last, for the most part, whereas PPC is an on/off marketing option.
I recommend evaluating your current digital marketing initiatives by aligning your strategy with this analysis. This model can of course, measure any form of marketing – producing crucial snap-shot insight for business decision making.
This simple method will help you to decide where to increase your spend and which areas require intense coaxing and optimisation.
The Bottom Line: PPC Isn’t Always Cost Effective
Contrary to popular belief, SEO has the potential to win the battle time and time again if campaigns are well researched and deployed to a strategy.
Too good to be true?
Probably a slight stain on the fair test, we must take into account that ‘SEO’ is a very broad term as of late, due to its exponentially holistic tendencies (inbound marketing, content marketing, conversion rate optimisation) which all attribute to organic traffic, directly or indirectly.
PPC is intrinsically self-reliant, with a sprinkling of conversion optimisation for landing pages.
Again, this is the inevitable hurdle when comparing the two side-by-side.
Analysis That Works
The above analysis model is one of the many we use at the agency to examine client performance. I’d love to hear your approaches!
Similarly, any problems or difficulties you have encountered with such investigations – I’m all ears…
[UPDATED: July 24th]
Ed has done a follow-up post to this one where Pay per Click advertising is fighting back!
Take a look here: “PPC vs SEO: Round 2, A Total Knock Out“.