How much of your budget should you allocate to SEO?
How much of your budget should you allocate to SEO?
Investing in SEO today can lead to increased revenue for your business in the future. To determine the appropriate budget for your SEO efforts, it’s important to consider several key factors.
The investment in marketing, particularly in digital marketing, has been on the rise in recent times. According to the latest CMO Survey report, there has been a significant increase in marketing growth, with the past year recording a growth rate of 11.8%, the highest in the last 10 years, from February 2021 to February 2022. Moreover, it is projected that this growth will continue to accelerate, reaching 13.6% in the coming year.
Digital marketing comprises the majority of marketing expenditure, with 57.1% of the total spend, as per the CMO Survey report. The report further highlights that digital marketing spending is projected to grow by a significant 16.2% over the next year. However, the portion of digital marketing spending that goes towards search engine optimization (SEO) is a smaller percentage.
According to a previous report by Borrell Associates, in 2019, companies in the United States spent $73.38 billion on SEO out of a total of $776.30 billion spent on all forms of digital marketing, which accounts for approximately 9.5% of the total digital marketing budget.
Interestingly, the report also indicates that businesses that handle SEO in-house, especially with local companies, experience higher costs and lower returns compared to those that hire a consultant or agency. On the other hand, engaging external help can lead to lower costs and higher returns.
The report states: that businesses rate third-party service providers as being more effective than their own internal skill when it comes to areas such as SEO and web design/development. This highlights the effectiveness of outsourcing these services to external parties.
Undoubtedly, investing in SEO is a crucial aspect of driving future revenue for your business. Consider the following:
- Sales drive business success.
- Leads drive sales.
- Digital leads come through a business’s website.
- Impression of the website in the search results attracts visitors to the website.
Therefore, by investing in SEO, businesses can ensure they remain visible and own the top of the sales funnel: the impression of their website in search results. Additionally, in some sectors, organic search has been found to generate 2x more revenue than other channels.
Next, let’s delve into the factors that influence the determination of an appropriate SEO budget for your business.
Factors that determine your SEO budget:
Determining the appropriate budget for your SEO efforts is not a straightforward process. However, certain factors should be taken into account to determine how much you should invest in SEO.
- Your competition
- Your revenue
1.Your competition:
It’s important to note that most search engine queries return a million or more search results, with only the top-ranked results on the first page mattering.
For businesses competing in organic search, the competition can be fierce. This is particularly true for those operating in challenging niches or competing against more prominent brands with more extensive budgets. In such cases, a higher SEO budget may be necessary to stay relevant in the search results.
If you’re not willing to invest in SEO to compete, you risk losing visibility and becoming irrelevant in the search results.
2.Your revenue:
In my opinion, businesses serious about competing in SEO should allocate at least 5% to 10% of their revenue or a minimum of $8,000 per month towards their SEO budget. If the competition is particularly intense, it’s better to lean towards the high end of that range.
An SEO budget of at least $8,000 per month allows for a good starting point with access to adequate expert resources, and some businesses may need to spend six times that amount for maximum impact.
It’s also important to consider the amount of money allocated to paid advertising. For example, a national brand that runs PPC campaigns to attract new customers should allocate approximately 25% of that amount to organic SEO. The two channels work together to help drive website traffic.
In summary, it’s reasonable for companies using ads to allocate at least $8,000 a month or 25% of their PPC spend towards their SEO budget.
How to decide your SEO budget:
To effectively compete in the crowded search results, your SEO budget should take into account two primary factors: your revenue and your competition. Investing a minimum of 5% to 10% of your revenue in SEO is a good starting point, but if you want to outpace your competitors more quickly, you will likely need to allocate more funds.
However, simply throwing money at SEO does not guarantee success. It’s important to hire experienced experts with a solid reputation, whether in-house or through a reputable third-party agency. Opting for inexpensive SEO services may seem like a cost-effective choice, but it can ultimately result in more time and money spent on repairing the damage caused by a subpar strategy.
With a well-funded SEO budget, you can leverage expert guidance to make impactful moves and gain an advantage over the competition. In times of economic uncertainty, rather than cutting back on digital marketing, consider using the opportunity to ramp up your efforts and gain an edge. By making smart, strategic investments in SEO, you can achieve better visibility in search results and attract more potential customers to your website.
Consider diverting budget to SEO:
If you’ve already allocated your marketing budget to other channels, consider moving some of it to SEO. For example, if you’re spending a significant amount on PPC ads, redirecting 5% to 10% of that for SEO shouldn’t be a problem.
Not only does SEO generally have better conversion rates than PPC, but it also provides lasting value for your brand’s online presence. In contrast, if you stop your advertising, you’ll lose all residual value in the search results.
Investing in SEO is more cost-effective in the long run, as your optimized webpages can continue to drive traffic for years. Of course, you still need to maintain the leads coming in today (whether through PPC or other means), so don’t turn off those activities. However, if you already have a good flow of leads, investing some of your budget in the future with SEO will pay off.