Search Engine Optimisation (SEO) is about getting to the top of search engines, like Google without paying for the privilege. The alternative is to invest in Pay-Per-Click (PPC) advertising which allows you to buy your way to page 1 of Google.
The first thing to do is Keyword Research. This includes finding out how many searches are carried out each month and what the advertising cost would be. For example, take the phase “Websites for Accountants”– I know there were 390 searches for this in March 2010 and the estimated cost per client is £3.84.
So, if I managed to get all 390 searches to click on my Website by SEO this would be worth £1,497.60 a month in saved in Pay-Per-Click (PPC) advertising. However, the problem with PPC is not only expensive but also difficult/impossible to get all 390 clicks because only 25% of people searching click on a sponsored link - 75% of searches will click an organic listing.
But, being top of Google for organic searches doesn't mean I will get all 75% searches because only 40% click the top link. But, if I assume my SEO efforts gets me to the top of Google then it could be argued that SEO would be worth £1,497.60 x 75% x 40% = £449.28 a month.
In summary, that is £5,390 a year for 1,404 visits to my Website.
But, this is just comparing the cost of PPC against SEO and thinking about clicks rather that profit or business value. The real value is what I make from the visitors over the lifetime of the relationship I get from the clicks.
If I assume 1.5% of visitors will end up buying from me then I will sell 21 Websites a year. By the way, if I was doing only PPC 1,404 clicks this would cost me £5,391.36 or £256.73 per Website.
If I make £500 for the design, build and Internet Marketing plus £50 a month and the client stays for three years then the lifetime value is £2,300. So, a year at the top of Google for a year is worth 21 x £2,300 = £48,300.
Think about what winning 21 clients is worth to you?
If you are an accountant with an average fee is £1,500 and you know can sell clients for 1.25 GRF then this is worth £39,375 a year.
The trouble with SEO is that it takes time to get to the top of the Search Engines. But, the good news is that what you need to do to get there will last so the investment can be leveraged over time and you can get a good idea of the investment needed by doing competitor analysis.
Let’s assume you need to invest £6,000 (being a mix of time and money) to get to the top of Google. Over three years this means an investment of £2,000 could bring you almost £40,000. Is that a good return compared to your other investments?
But, this is only thinking about what you can sell clients for NOT what they are worth.
If you assume you make 25% net profit, clients stay an average of seven years and one in ten clients will refer you then the lifetime value of a year’s SEO is 23 (21 clients plus two referrals) x £1,500 (average fee) x 25% (net profit) x 7 (years) = £60,375....not bad for a £2,000 investment.
SEO is part of Inbound Marketing which is where clients find you. This is the opposite of Outbound Marketing (e.g. telemarketing) which is getting harder and more expensive all the time. So, I would argue that every firm who is serious about building a profitable and sustainable practice should be doing SEO as part of the Inbound Marketing strategy.
Think about your Outbound Marketing efforts and consider re-investing some or all of the money. How much are you spending on Yellow Pages? Can you cut back of your PPC advertising?