Digital advertising spend reached an estimated $325 billion in 2019 and, after a brief stall due to COVID-19, is expected to increase to $389 billion in 2021.
Chances are, you’ll contribute to that with your SEO budget. But how much should you spend on SEO services?
Don’t worry — you’re not alone. For many companies, digital is their primary marketing channel. Even so, many owners and executives still have a difficult time budgeting for online marketing.
It’s just as difficult on the provider’s side to develop a winning strategy and put the right price tag on it.
In short, it comes down to a matter of positioning – how does your website compare to competitors? Your existing position and how fast you want to make progress are the top variables for determining a budget for SEO.
Expectations and Reality
One recent survey found that less than half of all small businesses have any money earmarked for SEO. For businesses that do invest in SEO services, they average just under $500/month.
In the end, it turns out that SEO is one of those things where you actually do get what you pay for.
Businesses spending more than $500/month are 53.3% more likely to be “extremely satisfied.”
Is it any surprise that so many business owners are reluctant to invest in SEO? Most business owners have no idea how search marketing works. They are far too busy running their businesses to spend time learning SEO.
In most businesses, there is a standardized step-by-step process to get from point A to point B.
Many assume that SEO works the same way. They treat it as a commodity and fall victim to the $99/month, “guaranteed page one” spammers, and scammers.
The Cost of Cheap SEO
I belong to a number of Internet Marketing Groups on Facebook. It’s truly frightening, the number of noobs posing as SEO professionals and taking on clients.
It’s not uncommon to see a question like: “I just landed a client that wants to rank for [keyword x] – how do I do it?”
A close second is the use of link schemes, specifically Private Blog Networks, without ever explaining the risk to clients.
If business owners were just throwing money away by hiring an incompetent SEO, that would be bad enough. Unfortunately, the collateral damage from “cheap SEO” can go much deeper.
It can draw a Google penalty and virtually wipe out a website’s visibility on the web.
Business owners need to keep in mind they’re ultimately responsible for any SEO work performed on their site. They should discuss the specific tactics to be used before entering into an agreement.
Managing Your Resources
With Google utilizing 200+ (and likely exponentially more) ranking factors, it’s easy to become intimidated and paralyzed.
The good news is that if you focus on just 3 factors, you can still crush it, regardless of your niche.
Here’s what you need to pay attention to:
1. Information Architecture
Your site should:
2. Content
Your site’s content should conform to best practices as disclosed in the Search Quality Ratings Guidelines with an emphasis on:
3. Backlinks
You Manage What You Measure – Set Goals
Before establishing a budget, one must define specific goals for a campaign.
Your goals should include measurable results, a defined timeframe, and an actual measurement for success.
At one time, success was measured solely by keyword rankings. While SERPs remain an important metric, they are not the most important metric.
I would argue the most important metrics are those with a direct impact on the bottom line. Organic sessions, goal conversions, and revenue fall into that category.
Goal setting could include improving organic sessions by X%, increasing conversions by Y per month and/or increasing revenues by Z%.
When setting goals, it’s important to keep a couple of things in mind.
First, they need to be achievable. Stretch goals are fine, but pie-in-the-sky benchmarks can actually work as a disincentive.
Equally important – you need to give the campaign time to work.
According to Google, “…in most cases, SEOs need four months to a year to help your business first implement improvements and then see potential benefit.”
Developing a Budget
Your goals will determine what tactics are needed for success. This, in turn, sets up a framework for developing an action plan and the budget necessary to support that plan.
This brings us full circle to positioning and paying attention to those factors that move the dial.
The answers to those questions will determine priorities as well as the volume of work needed to reach your goals.
In many cases, the actual work performed will be the same – regardless of budget level. The difference is the volume of work performed.
If you’re adding twice the content and twice the links at budget level “B” vs budget level “A” you have a higher likelihood of achieving earlier success at the higher budget.
That said, the right budget is one you can afford, without losing sleep, for a minimum of six and ideally twelve months.
It takes time to properly plan, implement and tweak a campaign in order to evaluate its success.
Also, keep in mind the lower the budget, the longer the journey.
How much can you expect to spend on SEO?
If you are hiring a top-level SEO company to execute a local campaign, expect to pay $500.00+ per month.
A national or international campaign will require a minimum budget of $2,500 to $5,000 a month.
Some firms offer a “trial package” at a lower price, with no contract. This allows prospective clients an opportunity to test their services, by minimizing risk.
If you can’t afford to retain a top-level SEO pro, there are some options. The most common is a one-time website SEO audit with actionable recommendations.
Just fixing your website will often lead to a meaningful boost in organic traffic. Content development and keyword analysis are other areas where you can get help from a pro for a one-time fixed rate.
Another option is to become an expert and do it yourself.
SEO Cost Calculator – Measuring Organic Search (SEO) ROI
Following is a calculator commonly used for (incorrectly) measuring Return on Investment for SEO.
Organic Search ROI Calculation Assuming “One Shots”
| Example: selling blue widgets | |
| Number of new customers acquired via organic search in a given month | 10 |
| Average net income (profit) per order | $100 |
| Total profits from new organic search customers in a given month | $1,000 |
| Monthly marketing budget (expense) | $2,500 |
| Monthly profits from new customers ($1,000) divided by monthly organic marketing spend ($2,500) | ROI = -60% |
The flaw in the above calculator is that it fails to take into consideration the lifetime value of a new customer.
Online retailers need repeat business, in order to grow. By not calculating the lifetime value of a new customer the true ROI is grossly understated.
The right way to calculate ROI is to build lifetime value into the calculator as seen here:
Organic Search ROI Calculation Assuming Lifetime Value
| Same example: selling blue widgets | |
| Number of new customers acquired via organic search in a given month | 10 |
| Average net income (profit) per order | $100 |
| Total profits from new organic search customers in a given month | $1,000 |
| Average number of orders per customer over a “lifetime” | 5 |
| Total average lifetime profit | $5,000 |
| Monthly marketing budget (expense) | $2,500 |
| Average lifetime profits from new customers ($5,000) divided by monthly organic marketing spend ($2,500) | ROI = 200% |
As you can see, that one variable makes a huge difference in how the ROI is stated.
The Takeaway
Unlike PPC, an organic search campaign will not yield immediate results. A comprehensive SEO campaign will involve a combination of technical SEO, content marketing & link-building.
Even when executed to perfection, it takes time for Google to recognize and reward these efforts.
With that said, the traffic earned from these efforts is often the most consistent and best converting among all channels.
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