In an ideal enterprise world, the CMO would budget for SEO. This would allow you to focus on building your strategy and not worrying about proving ROI for each line item.
Ideal, as I said. But it’s not realistic.
CMOs are often focused on brand strategy and activation. SEO can often be a completely new channel for enterprise marketing. SEO professionals are left to their own devices.
Anyone who has ever had to plan an enterprise SEO budget understands how difficult it can be to make this business use case. It can be a difficult experience.
How do you create an SEO budget to help an enterprise company?
As an enterprise SEO director for multiple companies, I have had the privilege of spending hours in spreadsheets and meetings to help C-suite understand why SEO should be budgeted and how it will impact the bottom line.
Here is my step-by -step guide for creating an SEO budget.
1. Understanding the business model
This is the first step in developing an SEO budget for an enterprise business.
The business model reveals which projects are funded and which don’t. Your organization will move in a certain direction if you have business models.
You can strategically plan your SEO budget by understanding your company’s business model.
You must get below the surface if you want to be an executive in an enterprise company. This is possible by asking these questions:
- How do customers behave? How do they find us. What do they click?
- Which business unit generates the highest revenue?
- What revenue metrics (LTV, CAC and margin) are we reporting on? )?
Your SEO strategy will be built on the business model. Your SEO strategies will be different for each business model.
Let’s take a look at some examples.
Rover’s business model revolves around lead generation. It has a map that lists dog walkers. This page must be designed to encourage users to enter their information.
Yelp’s business model revolves around advertising dollars and sponsored listings. The pages must be designed to support the advertiser’s spending.
2. Revenue and SEO can be correlated
As an SEO Director or higher, you cannot talk to the C-suite executives without mentioning revenue.
Let’s say you are presenting to a CEO. The CEO wants to know “I’d love to propose that we do X which will achieve $ZZZZ and cost $Y.”
Here’s what Matt McKinley (SEO Manager at Revolt Media & TV) would do to fill in the gap.
“X” would be the largest project in the SEO roadmap that is required to drive traffic/revenue. ZZZ is the potential increase in traffic x the average order value. Y is the cost of resources required for the project, such as tools, time, and other team members (developers, designers or editorial, etc.). ), additional SEO headcount, etc.”
If you don’t mention revenue when pitching to executives, you’ll likely be embarrassed more than Adidas for the Boston Marathon email disaster.
It’s hard to come back from that, right?
SEO professionals understand how difficult it can be to tie revenue to SEO, particularly if your analytics are not working.
It is not an easy task to connect page speed and revenue. But we must look at it from a different angle.
The following shows that the number of mobile URLs that have been indexed is a significant factor in our organic traffic. This can impact new customers and revenue.
Now you can make a statement such as:
“Each indexed Good MobileURL is worth $10.” We can add $5 million to the value of each Good Mobile URL if we increase their number by 50%.
Is that what you are smelling? It smells like BS. It is.
This is how enterprise executives operate. These calculations can help you to frame the potential value for a project more strategically.
It doesn’t have be 100% accurate. Executives want to see more than just traffic.
Let’s take, for example, the case where you want to create a series buying guides but need to increase the resources.
You can sell this idea to the executive team by saying something like, “We estimate our guides are worth $20,000 per year in incremental revenue.”
You’ll need historical data to help you get this information up to $20,000 You can show a before-and-after scenario of an increase in revenue after publishing a guide.
You can also look at categories. You could use the example above to pull data from the Xbox category sales following the launch of the buying guide.
Let’s look at another example. I was working on a budget request to add writers to a real-estate company.
Here’s how I transformed hypotheticals into ROI
With a 93% ROI, we could generate $2,910,000 per month from the blog. These assumptions are based on the following.
160 hours per Month for [LIST TEAM MEMBERS] in order to manage the blog (80hrs per person per month).
$23,720 per Month in labor costs to manage the website
$18,720 per Month for [LIST TEAM MEMBER] to manage the blog ($117 an hour).
$5,000 per Month for Freelancers (this is our current budget to produce the 20 blogs that we are currently producing)
Additional cost of $5,000 per month for new freelancers
Technology costs (hosting, maintenance plugins and Semrush) are $500 per month. This is an estimate.
The cost of managing the blog is $29,220 per monthly
Let’s say that 30 people sign up per month after visiting the blog.
A $150,000 house sale is worth $3,300 if we earn a 2.2% net commission. If we do more transactions, such as sales, listings, etc., it’s worth an additional $18,950 in income. A family with good connections can send us two $3300 transactions per year for 15-years, which will bring in $99,000 more revenue. The $3,300 transaction is the bridge that will bring you $121,250 in client lifetime value.
We know that we have company blog expenses of $29 220 per month. The $29,220 represents approximately 24% of the $121,250 that is used for expenses. This brings us to $92,030.
Let’s say that our customer lifetime value is $92,030.
We would generate $2,760,000.900 each month from the blog (30 sign ups per month from the blog x $92,030).
The monthly ROI of our blogging program is 93%. ($2,760,900 monthly revenue = $29,220 investment = 2,731,680 divided $29,220 investi = 93%)
Here is a link that will take you to my example document.
It doesn’t necessarily have to be exact. These are just assumptions based upon the data.
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3. Forecast SEO traffic
“Hey, we need to forecast SEO in 2023,” is a common question I receive from CEOs, CFOs and CMOs.
Before you can forecast traffic, it is important to understand your business model.
If you have a good understanding of your business model, you can segment forecasting based upon the business structure and not page type.
For example, I was part of a Brother USA project. In the beginning, I prioritized pages by type.
Once I understood the business model and all the business units, I was able provide a better forecast.
Once you have identified the areas of your website that you are forecasting, you can start to create your SEO budget spreadsheet.
Jori Ford, FoodBoss’ CMO, was my contact to learn more about forecasting SEO. Ford shared:
“I draw up traffic. Next, I determine a projected lift based upon SEO activities. Then, I align the lift with existing conversion metrics to show projected converts. I then calculate the total value of these conversions in relation to the business to get a rough estimate of the potential financial gain, whether it be revenue or just “value” and “cost.”
As you can see, it’s all based upon hypothetical scenarios.
To make your executive decision based on impact, I suggest thinking about four scenarios.
- Scenario 1: Baseline (if we do nothing)
- Scenario 2: Conservative
- Scenario 3: Average
- Scenario 4: Optimistic
If Best Buy wants to expand its buying guide, you can break it down into something like this.
Tom Critchlow’s SEO MBA course is a great way to learn more about financial models. Tom Capper’s article about SEO Forecasting in Google Sheets by Tom Capper is also amazing.
You can also take a different route if your agency is involved. I spoke with Will Critchlow (CEO at Searchpilot) to learn more about how Searchpilot works with enterprise companies.
We start with the Google trend of on-site SEO becoming more unpredictable and less rules-driven than ever before. The growth of their use AI/ML continues that trend. This, along with the greatest problems large organizations have with SEO, and the ability to prove the results, allows us to argue that SEO testing should be a part of their on-site strategy. We then build a budget case using an ROI model that assumes a certain test frequency, percentage of positive tests, typical uplifts, and a certain amount of testing.
Enterprise companies often underestimate the importance of SEO testing. You can present a stronger case for SEO ROI if you are able to A/B-test your SEO tactics.
Your executives should be presented with your enterprise SEO budget before you can present it to them.
Keep an eye on the overall marketing budget
The golden rule for company budgets is that 10% of your company’s revenue should go towards your marketing budget.
The remaining 10% is divided between offline and online channels.
According to Gartner’s 2022 marketing budget report, 56% of CMOs will spend online channels in 2022.
This means that you are fighting for a tiny piece of the pie.
Here’s an example of a range of enterprise SEO companies, and how much they should spend online.
Before you pitch your budget, it is important to look at the marketing budget before asking for anything beyond the overall marketing budget.
Compare your SEO budget with your PPC budget
Hypothetically, 56% of your overall marketing budget goes to online channels. You are now competing with other online channels for budget.
CMOs were asked by Gartner to explain how they allocate their online marketing budget.
- Social advertising: 10.1%
- Search advertising at 9.8%
- 9.3% to digital display advertising
- 8.8% to digital video advertising
- 8.1% for partners
- 8.1% to digital audio advertising
- 8.5% for SEO
- 7.8% for content and messaging
It’s shocking. CMOs allocate 8.5% of the 56% marketing budget for online channels to SEO.
Here’s what it could look like:
Next, you will need to determine how much of your SEO budget goes to technical, content, and link building.
This deep understanding of marketing budget will give you an idea of what budget you can aim for.
Accept the sucking of enterprise SEO budgets
SEO can seem tedious, pointless, and unutilized.
However, as SEO professionals, we have to embrace the suck.
It might seem like B.S. It might seem like a lot to you. It might sound like the alarm you’ve been ringing to your CEO or CMO. You can speak the business language and your executives will understand it.
SEO professionals must stop talking about pageviews and traffic and instead talk about revenue.
Budget spreadsheets don’t look very glamorous. But assumptions aren’t expensive.
It’s not about a scientific method. It’s about giving you something that will help you connect with the C-suite.
To show projected conversions, I first outline the current traffic and projected lift based upon activities. Then, I align that lift with the existing conversion metrics. I then calculate the total value of these conversions in relation to the business to determine a range of potential financial gains, whether it be revenue or just “value” and “cost”.
I propose that we increase monthly active users 20%. This will result in $ZZZ based upon the LTV (first-time purchase value) of a user. It will cost $Y to reach this level over the next ABC time period.
Search Engine Land’s first article was How to budget and plan for enterprise SEO.