Is SEO worth the investment? There are two ways to answer this question. What is the value of increased search rankings to your business, and what are the cost alternatives of not doing SEO?
Let’s dive into both answers. (WARNING: Lots of numbers, percentages and dollar signs. Be prepared!)
Is SEO Worth It?
A simple equation to determine if SEO is worth it is: (keyword search volume x expected click rate x average conversion rate x average order value)
Let’s say you’re trying to rank by the term “digital marketing firm.” According to Ahrefs.com, the term “digital marketing firm” is searched 900 times per month.
Based on our client research and analysis, the expected CTR to Google first page ranking is approximately:
| search position | CTR (%) |
| 1 | 36.5% |
| 2 | 12.5% |
| 3 | 9.5% |
| Four | 7.9% |
| Five | 6.1% |
| 6 | 4.1% |
| 7 | 3.8% |
| 8 | 3.5% |
| 9 | 3.0% |
| Ten | 2.2% |
| 11-16 | 1.5% |
| 17-50 | 0.3% |
Assume that your digital marketing services have an average monthly order value of $2,000 and an average conversion rate of 2%. Now, let’s put those numbers into the equation, assuming we rank #1 for the term “Digital Marketing Company”. 900 monthly searches multiplied by a 36.5% click rate and a 2% conversion rate, multiplied by $2,000 per month, would yield a total monthly revenue of $13,140.
OK, now we have the best case scenario. Now let’s find the current scenario, assuming we are currently ranked 23rd for the term “Digital Marketing Firms”. In this case, 900 monthly searches multiplied by 0.3% CTR * 2% conversion rate * $2,000/month yields $108/month in revenue.
Now you have a range. Ranked #23 for the term “digital marketing company” is worth $108/month and #1 ranked is worth $13,140/month.
The key missing factors in this equation are the likelihood of achieving better search rankings (based on keyword ranking difficulty) and the time it takes to rank (based on the SEO manager’s skill set, strategy, and execution of the strategy). based on the success of ). Such things are difficult to predict and calculate.
Let’s take a look at a sample ranking curve to see the ROI of an SEO firm for the search term “digital marketing firm.”
| Moon | search position | CTR (%) | Month Value ($) |
| 1 | twenty three | 0.3% | $108 |
| 2 | twenty two | 0.3% | $108 |
| 3 | 18 | 0.3% | $108 |
| Four | 15 | 1.5% | $540 |
| Five | 12 | 1.5% | $540 |
| 6 | Ten | 2.2% | $792 |
| 7 | 9 | 3.0% | $1,080 |
| 8 | 7 | 3.8% | $1,368 |
| 9 | Five | 6.1% | $2,196 |
| Ten | Five | 6.1% | $2,196 |
| 11 | 3 | 9.5% | $3,420 |
| 12 | 3 | 9.5% | $3,420 |
Adding up all 12 months gives an annual value of $15,876. So if his total cost of SEO services per month is $2,000 per month x 12 months, that would total $24,000 for the full year. The first year net loss is $8,124.
| Moon | search position | CTR (%) | Month Value ($) |
| 13 | 3 | 9.5% | $3,420 |
| 14 | 3 | 9.5% | $3,420 |
| 15 | 3 | 9.5% | $3,420 |
| 16 | 3 | 9.5% | $3,420 |
| 17 | 2 | 12.5% | $4,500 |
| 18 | 2 | 12.5% | $4,500 |
| 19 | 2 | 12.5% | $4,500 |
| 20 | 2 | 12.5% | $4,500 |
| twenty one | 2 | 12.5% | $4,500 |
| twenty two | 2 | 12.5% | $4,500 |
| twenty three | 1 | 36.5% | $13,140 |
| twenty four | 1 | 36.5% | $13,140 |
Now, adding up all 12 months from 13th to 24th gives us a yearly value of $66,960. Assuming the cost of SEO services stays constant at $2,000 per month x 12 months, that’s a total of $24,000 for the full year. Now the second year net profit is $42,960 and the two year total net profit is $32,640.
Now you have an estimate of the SEO value for your main keywords and how much you expect to pay for SEO services and ROI in the short and long term. This leads to the following questions to consider.
How much does an SEO alternative cost?
The best SEO alternative is PPC, or pay-per-click advertising. why is it the best? Don’t wait to be number one. When he launches his PPC ads on Google AdWords, he appears in sponsored search results above organic search results. For example, consider the keyword “digital marketing company”.
Using the Google AdWords free keyword tool, we can see that Google’s suggested bid for this keyword is around $25 per click. Sponsored Google ads typically have a lower CTR than organic search results, so for the sake of his calculations he assumes a CTR of around 5%.
900 searches per month x 5% CTR x $25 per click = $1,125 per month ad spend
900 searches per month x 5% CTR x 2% conversion rate x $2,000/month = $1,800 revenue
These equations show a positive ROI if you manage your own advertising. Even if you’re paying $500 a month to have someone manage your ads, your ROI is positive.
How does this equate to a year of SEO work? Two years or so?
The net income for years 1 and 2 would be $8,100 for the year, or a total net income of $16,200. Then, factoring in the $500 monthly ad management cost, over two years he would earn $4,200.
The one-year comparative SEO net loss was -$8,124 and the two-year cumulative gain was $32,640.
Will PPC help me earn money faster? Yes. Will using PPC cost more? Yes.
So, is SEO worth it for small businesses? Identify your search term. Run the above equation. Let the numbers guide your decisions.
