Search Engine Marketing (SEM) is one of the most effective ways for business owners to grow their brand and increase their profit. SEM is made up of two distinct approaches – Pay-Per-Click (PPC) and SEO (Search Engine Optimisation). Both PPC and SEO have their merits, and are highly effective when combined. But if you’re starting a small business and you have a limited budget for marketing, you may not be able to invest in both straight away.
You may be trying to figure out what type of SEM is more effective, and which you should start with. To determine this, it is important to first understand exactly what SEO and PPC are.
Pay-Per-Click is a model whereby a company that has placed an advertisement online will pay the host website for each time a user clicks on the advertisement. When speaking about Search Engine Marketing, PPC describes advertisements placed in search results, such as Google AdWords. Often, these advertisements will appear above the organic search results, below them, or in a column on the right hand side of the page.
Search Engine Optimisation
Like PPC, Search Engine Optimisation aims to attract visitors through the positioning of the website name and description. Unlike AdWords, search engine optimised websites appear in the organic search results. SEO aims to improve the website’s position within the organic search results, by ranking high according to the search engine’s algorithms. Google for example, has 200 ranking factors. Some of the key elements measured are credibility, usability and quality content.
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One of the appeals for a Pay-Per-Click campaign is that the advertiser can observe results in a short space of time. Through an AdWords campaign, a business can dramatically increase its visibility for a number of different terms within a day. PPC campaigns are particularly useful for businesses advertising a limited-time-only offer or a special, one-off event.
A key strength of SEO is the longevity of its results. While achieving a high ranking in Google takes time and requires the knowledge of an SEO specialist, maintaining that position is relatively simple. When SEO is done properly, your business will require relatively minor effort in future to maintain its rankings once achieved. Though you would still need an SEO consultant to maintain your rankings and to have an edge over your competitors.
With PPC, you’re paying a fee each time a person clicks on your website. Costs per click vary between each phrase, with the average being $1-$2 per click. The most expensive phrases cost upwards of $50 per click. The advertiser pays for each click, regardless of whether or not that click leads to a meaningful action.
Like PPC campaigns, the cost of SEO varies. Based on a poll conducted by Moz, quality SEO costs on average, between $750 and $1500 per month.
On average, the overall cost of SEO is estimated to be 45x less expensive than PPC.
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Studies have shown that when it comes to generating website traffic, SEO is more effective. In June 2011, research conducted by e-Consultancy, based on a sample data group of 1.4 billion searches in Google and Bing found that search engine users clicked on organic results 94% of the time. When it came to branded searches, users clicked on the top result 80% of the time.
According to research published by Moz, organic results are 8.5x more likely to be clicked on than paid search results.
Furthermore, studies reveal that sites ranking 1st in Google search results have an average click-through rate of 31%, while the average for a paid advertisement is 2%.
These figures demonstrate that SEO is also more effective in attracting more visitors to the website.
Return of Investment
For business owners, ROI is usually the bottom line when it comes to judging whether or not a marketing strategy is successful.
A recent analysis of Google AdWord accounts estimates that the average conversion rate is 2.35%. So, if an advertiser pays $1.50 per click, every 1000 clicks will cost $1500. For the average advertiser, between 23 and 24 of these clicks will result in a meaningful action, such as a sale or lead.
A recent Google Economic Impact Report found that businesses make an average of $2 in revenue for every $1 they spend on AdWords. This is an average ROI of 100%. However, it’s important to remember that the business needs to continue investing in order for their website to continue achieving this result.
While findings on the ROI for Search Engine Optimisation varies, they all indicate that quality SEO has a higher ROI when compared to pay-per-click campaigns. According to the Nielsen Company, of advertisers who are aware of their ROI, 40% have been able to achieve a return of 500% or more. Meanwhile, only 22% of advertisers using PPC were able to achieve this value. Furthermore, because SEO requires minimal if any investment after the 1st year, there are no limits to it’s potential to generate return for the business.
SEO and PPC advertising can work well together, and this is a particularly good strategy if your business is announcing something new, such as a limited time deal, or a unique and brand new product.
But, when it comes to the overall lifespan of your brand and online presence, Search Engine Optimisation offers better value for your money.