How Much Should You Spend on SEO?



February 25th, 2015 / Nicole S

Search Engine Optimization (“SEO”) is the art of increasing your ranking on search engine’s like Google. It is integral to any online business to increase their ranking on search engines as increased ranking creates more traffic to the website.

So when clients ask the question: “How much should I spend on SEO” the only answer is, “it depends”. After a scoping study or engagement we can provide a detailed analysis and only then work through client’s abilities and customer priorities. A lot of SEO can be done internally by clients with proper direction or education.

So the answer to How much should I spend on SEO? is “it depends” as there is no dollar figure that is possible given SEO is an ongoing process with 1000’s of factors outside of a business’s control. Why as the art of increasing your rankings on search engines is dynamic as Google updates there algorithm over 600 times per year. Further everything your competitors do online has an impact. Accordingly there are countless factors outside of your control, they all to the cost extent possible should be monitored.

That said, the problem or the conundrum that the answer “it depends” causes is that often CEO’s or CIO’s do not budget for SEO or if they do pay it scant regard. The failure to budget and properly strategize SEO has already cost many careers. The further complicating factor is that occasionally when CEO’s/CIO’s do budget for SEO the moneys are expended on disreputable operators and this embarrassment causes a cut or nil ongoing investment in SEO. Too many companies have been burnt with poor operators.

That said, to be a successful CEO’s or CIO’s it is integral to spend money on SEO.

We have a formula we work through with retail clients. Each client is different, but in retail we use the below model. Firstly we detail how a typical Bricks & Mortar cost structure is broken down.

Bricks & Mortar Retail – Cost Center

Business Categories % Costs
Occupancy (rent) 20%
In-store wages 15%
Stock 41%
Cost of doing business 12%
Profit 12%

The model below is the online business model contained within a Brick & Mortar retailer.

Online Retail – Cost Center

Business Categories % Costs
Warehouse – Pro rata to overall sales 10%
Wages Digital Team 15%
Stock 41%
Cost of doing business 10%
Digital Consultants 8%
Profit 17%

Hence Profit for a well-run Bricks & Mortar retailer is circa 12% of gross revenue. *JustGroup

Profit is 17% + for the online component of a Bricks & Mortar retailer.

Remember we have to inform the CEO/CIO of a business case or value proposition on SEO. The simplest way is arrange for the CFO to break down the cost of delivery of online sales as per the Online Retail – Cost Center model above. Make the online costs for a retail business its own journal entry. This is the best in class method.

We recommend educating key stakeholders on SEO in house via trustworthy consultants. It is impossible for one person, the Head of Digital Strategy or unlikely that one team can be across all SEO elements.

Marketing and SEO in 2015 are merging at a frightening rate, and this is rapidly increasing the cost of SEO. To optimize the Halo/Ripple effect from well executed marketing campaigns and improve to capture customers at the cheapest point your website has to be optimized for SEO.




ABOUT THIS ARTICLE

Businesses have difficulty deciding on how much they should spend on SEO. The truth is, it depends on a lot of factors.


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*Predikkta has sourced several external independent global tools to analyze websites.These tools do not reflect on occasion the internal website analytics, but are recognised global tools and provide accurate comparative results for measurement against competitors.

**The views in this article are those of the author