Why SEO Remains an Underfunded Online Marketing Tool

March 19th, 2012 07:51am CDT by Nathan Schaad

by Nathan S

I’m not going to lie: This post is, essentially, a reframing of two different blog posts on SEOMoz. One by Rand and one by Three Deep. These two articles are by far some of the most poignant investigations on PPC and SEO investment that I have seen online. One of them (Rand’s) is 4 years old and still extremely apt. My goal here is to sum up some of the points the authors make, and to comment on their points with my own observations.

Rand’s Non Sequitur

It’s got a nice ring to it, don’t you think? Like Archimedes’ Principle or numerous philosophical paradoxes. Okay, maybe I’m putting too much stock in this phrase. At any rate, Rand’s Non Sequitur goes something like this:

87% of online marketing spend goes to PPC advertising, and 11% goes to SEO. However, SEO drives 75% of search traffic, as opposed to less than 25% for PPC. So PPC gets the bigger budget.

When framed in such stark language, the idea of spending such a disproportionate amount of money on PPC campaigns seems rather foolish. However, this disconnect still struggles to be a sufficient explanation for SEO to gain a substantial investment from most companies. This has less to do with PPC being more effective than SEO, and more to do with PPC having far more measurable results than SEO.

Three Deep Follows Up: 4 Years Later

Clearly, once someone has laid out such an obvious gap in logic, it only follows that change should come swiftly in order to compensate for the fallacy. Right?

Unfortunately, this news hasn’t had much penetration, and the disproportionate spending of PPC and SEO continues today. The question, then, is why? By likening SEO and PPC to two different types of capital investments, Three Deep explains it quite succinctly:

PPC is a stable investment in a program which will steadily increase revenue year after year.
SEO is an investment where you will likely lose money your first year, but then reap much better returns in year 2 and 3.

So, naturally, SEO is seen as much riskier by most business owners. Factor in that many marketing budgets are based on an obsolete model of “working” vs. “non-working” dollars, and it starts to make sense why SEO is such a hard sell. Three Deep concludes their article by recommending that education is the key to changing this paradigm in the future, and my hope is that this little summary at least draws the curiosity to begin that process.

So, what do you think of those links?





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