SEO is 1433% more cost effective than PPC!
Yes you read it correctly, 1433%!
Read on to discover how I managed to work out this figure, and how it could have been nearly 4000%.
One of my clients, let’s call him John, runs an eCommerce website which is around 18 months old. Site promotion is conducted through SEO and PPC (Google AdWords), with the occasional foray into traditional marketing methods from time to time.
John manages his own PPC spending directly, and apart from the odd data check, I have no input into this side of his marketing.
I am charged with the SEO for his site, and as part of this I track many aspects of the site using a web analytics package.
I’d like to share with you a 6 month overview of his eCommerce store’s traffic, traffic sources, and sales conversions.
The tables below represent actual data pulled from the web analytics package and Google AdWords. So there is no confusion, definitions for the terms listed are found below:
Source:
- AdWords – Visitors arriving to the site from Google AdWords only.
- SEO – Visitors arriving to the site from any search engine. No AdWords / paid visitors, no direct entries such as bookmarks, or simply typing in the URL.
Visitors:
- Individual visitors to the site. 1 visitor may browse 300 pages but will only be classed as 1 visitor.
Sales:
- The number of sales made by the eCommerce store from each visitor source. These figures do not include any telephone sales as they are impossible to track in this fashion.
Cost:
- The amount John has paid directly for this traffic.
- AdWords cost data taken directly from AdWords console.
- SEO cost data taken from my nominal monthly charges.
Cost Per Sale:
- Simple calculation based on cost of visitors / number of sales. A basic yet effective metric.
November 2006
SEO work starting to bear fruits after a previous 3 – 4 months initial groundwork.
December 2006
Steady growth for the SEO traffic, AdWords seems to be getting more expensive based on the lower amount of traffic.
January 2007
A dramatic increase in SEO and AdWords traffic can be seen, also a double in the number of sales from SEO. AdWords getting quite expensive now. Obviously some seasonal trends may be at play here.
February 2007
Still further growth from SEO traffic despite the short month!
March 2007
Another leap forward in traffic from SEO work, AdWords expense still climbing.
April 2007
The final month from the review. SEO is almost doubling the PPC traffic and sales are more than double. Hint, this is the month that SEO was nearly 4000% more effective than PPC.
6 Month Totals
Let’s take a minute to look at the 6 month overall figures above, and list down a few points:
- Despite a slow start, SEO work generated almost the same amount of traffic as the PPC spending.
- SEO actually generated more online sales than PPC.
- The SEO fees were only 7% of the PPC spend.
- The cost per sales figures show that SEO was actually 1433% more cost effective than the PPC.
You may think that this is a one off but I have seen other small businesses with massive PPC bills coming in each month which are hardly making a profit.
Other notes on these figures:
- If John stopped his PPC today he would save his business nearly £2000 per month costing him 33% of his online sales. (Based on Aprils online sales figures.)
- Based on the last 2 months figures the SEO would increase enough in around 3 months to more than make up for this 33% loss.
- If John stopped using our SEO services today he would not lose any of the monthly traffic or sales, they just may not increase as much.
AdWords and PPC definitely has its place in the online marketing arena and, when utilized correctly, can be a valuable addition to most businesses.
SEO work generally takes longer to get going, and can seem like you’re paying for little in terms of results for the first period, however the figures show that long term investment in SEO can transform a business and save literally thousands of pounds a year in marketing costs.
I haven’t even touched on conversion figures for the sample site, I think I’ll save that for my next article…
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Darren Atkinson @ May 29, 2007