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SEO vs PPC? Time To Compare Your Business Costs

A question which derives from a long-standing debate; which digital marketing strategy is superior?

Spoiler alert!

Neither.

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’.

Very true.

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.

Wow.

But don’t get blown away.

Don't get blown away by theoretical PPC returns...

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.

Measure your digital marketing campaigns


*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.

Example of cost-effectiveness analysis for SEO vs PPC


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“.

Sam Hurley

Author: Sam Hurley

Part of the new breed, Sam is Head of Search at Midas Media. A modern marketer who balances technical intricacies of SEO with deep knowledge and experience of broader Digital Marketing, he enjoys results. And fast cars.

  • http://www.onyxdigitalsolutions.com Joseph Silveira Asamoah

    “The ROI to this business model still arrives at a whopping £1.5 million” can you please explain further on how you arrived at this figure….

    • http://uk.linkedin.com/in/hurleysam/ Sam Hurley

      Hi Joseph, thanks for your question!

      Here is the formula:

      £100 per click

      10,000 clicks = £1,000,000 (spend)

      5% of 10,000 clicks (visitors) converted = 500

      500 x £5,000 = £2,500,000 (gross return)

      £2,500,000 – £1,000,000 = £1.5 million (net return)

  • http://www.onyxdigitalsolutions.com Joseph Silveira Asamoah

    Secondly in your opinion what comprises SEO spend?

    • http://uk.linkedin.com/in/hurleysam/ Sam Hurley

      This depends entirely on the business in question –

      SEO could simply mean technical on-site projects.

      In contrast, SEO may include only off-site campaigns which combine other strategies like Inbound Marketing, Social Media etc. which assist SEO work in a holistic sense.

      Spend in any of these areas could be deemed ‘SEO spend’.

  • http://thatsearchguy.com That Search Guy NL

    nice article. Regarding the cost per organic visitor/conversion: do you discriminate between branded and non-branded searches? If so, how?

    • http://uk.linkedin.com/in/hurleysam/ Sam Hurley

      Cheers for your comment!

      Since Google’s exclusion of most keyword data, this has become difficult. There has also been proof of organic visits showing as direct traffic in Google Analytics, so the lines are pretty blurred after taking these two things into account.

      Working with the data that is available, you can estimate branded organic visits by running a keyword report in GA and excluding all brand terms.

      Take total organic traffic then subtract the not provided total, leaving the available data set. Subtract not provided from the total of the non-brand filter, leaving the total ‘provided’ data and non-branded provided data.

      The difference between these figures is the branded provided total. You can then calculate the brand % and non-brand %. (The missing data does often constitute a large portion, unfortunately!)

      It’s also a good idea to use AdWords data to track branded impressions and clicks. You can extrapolate the % to gauge branded organic traffic.

      SEO and PPC work great together!

      • http://thatsearchguy.com That Search Guy NL

        thanks, that approach makes sense.

        i would recommend adding the distinction between branded and non-branded to the calculatoin of your CPA’s to assess the ROI of your SEA and SEO efforts.

        (because differences in branded traffic are mostly due to other marketing activities that could ruin your calculations)

  • http://www.rickeliason.com/ Rick Eliason

    @disqus_y38qIpW5aO:disqus , I have just written an article that looks at 14 ways SEO & PPC should be used TOGETHER that you and your readers might like. I’d love for you to check it out :) http://www.rickeliason.com/seo-and-ppc-equals-love/

  • http://digitaldomination.com.au Steve Fitz

    Interesting post. I think there’s far more to consider when comparing the ROI between SEO and PPC. One key point you didn’t mention is the control you have with a PPC campaign vs the lack of control with an SEO campaign. I’m talking positioning of ads, split testing calls to action, ad extensions not to mention the landing page choice and copy there. All components that cannot be controlled with any SEO effort. I recently wrote a blog considering similar to what you’ve said but it dives into a few more areas – I’d be interested to hear what you think http://digitaldomination.com.au/seo-worth-paying/

    • http://uk.linkedin.com/in/hurleysam/ Sam Hurley

      Thanks for this Steve – You make valid points. I’ll take a look this week and get back to you with my thoughts! :)

      • http://digitaldomination.com.au Steve Fitz

        Cheers, looking forward to seeing your feedback. It’s great to have an open discussion on this topic as there’s so much depth.

  • Butler

    How can you equate all organic traffic to ‘SEO’? That seems more than a little off…

    • http://midasmedia.co.uk Ed Leake

      Do I hear a round 3? Fiiiiiight!

    • Gerry White

      what else can it be attributed to ?

      • Butler

        Not sure if you’re trolling me, Gerry, judging by your background!

        A great (great) many factors. Not easily, of course, but that doesn’t mean you can simply attribute it all to SEO activity…

        • http://midasmedia.co.uk Ed Leake

          Completely agree – the attribution model goes a long way to showing actually how many touch points are required for anything. Traffic/visits is rarely one-and-done in nature.

          In fact, a portion of organic traffic will come as a result of an initial paid visit.

    • http://uk.linkedin.com/in/hurleysam/ Sam Hurley

      Holistic measurement of all current marketing campaigns should always be applied; the analysis of organic traffic is just one slice of the pie when assessing SEO performance, but a good starter for ten! After all, direct traffic is sometimes confused with organic in Google Analytics, paid traffic incorrectly tagged from 3rd party software etc…

      Ensuring your Analytics is properly setup means you’re 65% there!

      This article could have been very, very long but there will be a time and a place for that 😀

      Thanks for your comment Butler!

  • https://swiftsocial.com Kirk @ SwiftSocial.com

    I think we should throw social media marketing (as a traffic driver) into the mix and really make things interesting. 😉

    • http://uk.linkedin.com/in/hurleysam/ Sam Hurley

      Next blog topic right there ;-D

  • Chris Cahill

    I think this is a very slanted perspective and I support both SEO and PPC. PPC absolutely has a lasting impact – once they have clicked and converted, they are yours to market to forever. Not to mention the ability to retarget. Additionally, there is no faster way for your brand to get to the top of the page and be seen, even if not clicked. Thousands of people may end up at your site just by seeing the ad and not clicking (fearful that Google will be tracking them). SEO is great but these arguments are biased. Sorry.

    • http://uk.linkedin.com/in/hurleysam/ Sam Hurley

      No need to be sorry Chris – great response!

      Ed balanced the argument here:
      http://midasmedia.co.uk/ppc-vs-seo-round-2-a-total-knock-out/

      As with anything, it depends on your business model. What works for some, won’t work for others i.e. PPC probably wouldn’t suit a typical informational website, but would suit an ecommerce store.

      Ultimately, a blend of the two is usually a good bet.

      Cheers,
      Sam :)

    • https://www.facebook.com/edleake Ed Leake

      It’s ALL about attribution.

      We have many clients that see conversion from ‘SEO’ but it’s last-click attribution and doesn’t tell the story. This is particularly true of longer sales cycles whereby PPC drives the first touch and direct or organic drives the last. In these instances PPC loses out … hence it is our job as marketers to report on the paths that go us there!

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