How much of your budget should you allocate to SEO?

The number of businesses investing in marketing is on the rise, especially in digital marketing.

Marketing growth reached 10% for the first time since 2000, when it was at its highest level in 10 years. According to the CMO Survey report, marketing spend grew by 11.8% in the past 12 months. It is expected to grow even faster in the next year to 13.6%.

At 57.1%, the majority of marketing spend is attributed to digital marketing channels. According to the same report, digital marketing spending is expected to increase by 16.2% over next year.

But how much digital marketing spend goes towards search engine optimization?

According to a Borrell Associates report, U.S. companies spent $73.38 Billion on SEO in 2019, out of a total $776.30 Billion for all digital marketing. This is roughly 9.5% according to the earlier report.

According to the report, SEO done in-house (at minimum with local businesses) results in higher cost and lower return than hiring a consultant or agency. This yields lower costs, and higher returns.

According to the report:

“Those who use third-party services rate their effectiveness higher than their own internal skills.” Particularly, SEO and web design/development tend to favor third parties being more efficient.

SEO is an investment in your future revenue. It’s a smart investment in your business’ future revenue.

• Sales is what drives a business.
• Leads are what drives sales.
• Websites are the best way to get digital leads.
• Search results can be used to show impressions that people find websites.

SEO allows businesses to be at the top of their sales funnel. This means that your website appears in search results. Some sectors report that organic search generates 2x more revenue than any other channel.

What determines your SEO budget? This will be my next topic.

SEO budget determinants

How much of your budget should you allocate to SEO?

It’s not a simple decision. However, the following factors will help you decide how much to invest.

• Your revenue
• Your competition

1. Your revenue

I recommend that you spend $8,000 per month, or 5% to 10%, on SEO. This is because it is highly competitive. This is the best way to see businesses who are serious about their competition.

A monthly budget of at least $8,000 is a good starting point. Expert resources are also available. We have clients who spend six times as much each month at the top end.

Consider how much money is being spent on paid advertising. A national brand running PPC campaigns to attract customers should spend 25% more on organic SEO. These two channels work together to drive website traffic.

It’s reasonable to estimate SEO spending for companies using ads at 25% of PPC spend or $8,000 per month.

2. Your competition

You should consider that the majority of search engine queries result in at least one million search results. To be considered relevant, you must be on Page 1.

Competing in organic search is a tough task for any business. However, if you’re in a niche that is difficult or up against large brands with larger budgets, you might need to work harder and faster.

This can often mean that your SEO budget will need to be increased. You must be prepared to do this otherwise you risk being ignored in search results.

How to determine your SEO budget

You now know that your SEO budget is influenced by two main factors: your revenue and your competitors. Let’s look at this in context.

We all know there is a lot of competition in search results. The question is not “How much do I want to spend on SEO?” but “How fast can you beat the competition?”

This will determine your budget. You should spend between 5% and 10% of your revenue on search engine optimization. If you want to move faster, you can spend more.

This does not mean investing blindly in SEO hoping for better results.

But you do need resources. You must know who you are hiring and have a good reputation.

Use a third-party SEO agency to ensure you only hire the best. Many businesses settle for cheap SEO services. Cheap SEO can lead to near-death experiences. It will take you longer to dig out the grave you dug than if your company invested in a healthy SEO strategy.

You can make the most of your resources by learning how to SEO with a budget that is reasonable. You have a better chance to succeed if you are more agile than your competitors in making these changes.

When possible, take advantage of downturns if you’re able. If you don’t have the gut reaction to pull the budget for digital marketing whenever the outlook is uncertain, you will be able to increase your productivity and surpass your competition.

You might consider redirecting your budget to SEO

Consider refocusing your marketing budget on SEO if you have already spent too much on other channels.

Consider, for example, that you spend a lot on PPC ads. It shouldn’t be a problem to take 5% to 10% off that amount for SEO.

You will be glad you did, especially when you consider that SEO outperforms PPC in average conversion rates. SEO is a powerful tool for promoting your brand online. Ads are not the same as SEO. If you stopped advertising tomorrow, there would be no residual value in search results.

SEO is more cost-effective over the long term because optimized webpages can continue driving traffic for many years.

You must keep leads coming in today, whether it’s through PPC or another means. I’m not saying you should stop these activities. If you have a steady stream of leads, you should invest some of your budget in the future. SEO will help you get there.

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