What is the value of SEO? Is it worth the cost?

Is this you?

You just received an SEO bid to optimize your local business website. Maybe you’re a dentist, a doctor, an attorney, a contractor or any of a number of other local businesses. You’re used to paying $1,000 a month for your Yellow Pages ad or less, and now some SEO is recommending you add HOW MUCH to your monthly advertising spend!

You’re thinking, “Why do I even need this when I get a good return on investment for my Yellow Page ad?” How can I improve on that? Is SEO really worth the cost? You’re wondering if you need it at all, and if you do, you don’t know where to turn to get it.

Let’s consider the example of an acupunturist in San Jose, California and see if SEO is a good investment for her. As we do this you can perform the same research on your own business and make your own conclusion.

STEP ONE – Find out what your competitors consider to be the value by spying on their PPC campaigns.

Let’s take a look first at what the San Jose acupuncturist’s competitors are paying to Google per click on their PPC ads for the keywords “acupuncture san jose.” We can find that out by going over to KeywordSpy.com and submitted a keyword query. You can see the results below.

If you are that San Jose acupunturist, those results show you that there are on average 1,000 searches for YOU. These are not searches on information about acupuncture. If they were, they would not have added the city in the search. No, these are people specifically looking for an acupuncturist in their area, and they are most likely ready to pick up the phone and make an appointment.

This means if you are not showing up on the first page of Google, you are missing out on potentially 1,000 phone calls per month. Ask yourself, “Do you get 1,000 phone calls a month from your Yellow Page ad?”

Now consider this, these query results are only for “san jose acupuncture.” How might other people search for you? KeywordSpy is showing us the keywords that businesses are bidding on, but not all keywords that are being searched on.

If you look down in that list you’ll see “acupuncturist san francisco.” Do you think people are also searching on “acupuncturist san jose”? You bet they are and Google’s free keyword research tool confirms that. For those two keyword phrases Google reports 2,600 queries per month. Again, that’s 2,600 searches for YOU if you are that San Jose acupuncturist!

And there’s much more potential! You can also get clicks and calls from a whole slew of other keyword queries.

If you are an acupuncturist, you know that you can help relieve back pain, boost the immune system, provide relief for chemo therapy, and so much more. And then what about searches for the same in surrounding towns and cities? If you’re in San Jose, you’d also love to get business from searchers in Campbell, Sunnyvale, Santa Clara, and more. Since you border those towns, if you give your customer a reason to perhaps drive an extra mile or two, such as better service, better results, better reviews, or better prices, it’s also entirely conceivable that your website could also show up in searches on those keywords and get the clicks and the phone calls if you’re optimized your site and meta tags (those snippets that show in Google results) well for visibility, hits, and then conversions.

So the potential reach is enormous, but for the sake of this argument, let’s stick with the 1,000 searches per month. How much are those really worth?

Well, look at how much acupuncturists in San Jose are willing to pay per click on their ad. In this case it’s $4.49. That’s per click. A click doesn’t necessarily mean a phone call, but at least it’s an opportunity to sell them and entice them to call.

Stop here for a moment and consider the seriousness of this. You could be getting people landing on your website but the presentation is so bad, it sends them away. So before anything make sure your website is in order and is a professional, quality representation of your business.

Now assume they like what they see and they call you. What percentage of inquiries actually turn into conversions for you? And out of those conversions, what is the average profit made from each? Going back to our acupuncture example. In their case, most phone calls actually result in appointments but let’s say only 80% do. And what is the profit potential and average of that client? The potential is really the lifetime of that client, but let’s think smaller. Let’s say on an average, an acupuncture patient sees the acupuncturist a total of 5 times. And let’s say each visit is $125. That one call then could easily be worth $625. And they paid $4.49 for that ad. That’s a nice profit. And that’s just one query and one phone call.

But what if they landed on the site but didn’t call? What is that costing them? And what about the other 999 queries? Where are they ending up?

PPC or SEO?

Now consider this, some studies show that only about 25% of searchers click on the PPC ads. Other studies show as little as 2.5%. I think this differs widely depending on the type of query. A query on shoes for example, might get a lot more clicks on the ads than a doctor. In fact I think that any service business probably does better with organic SEO than with PPC. Reason being, people generally don’t trust ads as much and since they are looking for a service individual, they want to find someone they can trust. So they look below or to the left of the ads in the organic results to find what they are looking for. If the 2.5% statistic applies in the case of a San Jose acupuncturist, this means that out of the 1,000 searching on those keywords, 975 look in the organic results for an acupuncturist to call. And that severely diminishes the rate of return of the PPC we used in our example above.

Looking at research again, we find that position on an average gets about 27% of the clicks, positions 2-5 get 8.5% each, and positions 6-10 get 3.63% each. So, where would you rather be? In a PPC ad sharing 2.5% of the clicks? Or in the organics, sharing the 97.5%?

Now let’s calculate the value of a first place position.

27% x 1000 = 270. Assuming you have a website that entices them to call and you get 50% setting appointments when they call, that’s $xxxxxxx potential EACH MONTH for just one keyword phrase! And they want you to pay HOW MUCH for their SEO services?

Of course, different types of businesses will get different results. Take a contractor as another example. Their conversion rate is much, much smaller, perhaps as low as 5% per call. If we search in KeywordSpy on San Jose construction company, you’ll see there were 320 results and ads were going for $3.28 each. What’s the average income from a construction job? $200K, $1,000,000? Let’s go low at $100K. 320 x 27% x 5%= 4.32 new jobs x $100K = $400K per month for one set of keywords! Then add in bathroom remodeler, deck remodeling, home remodeling, building contractor and many more.

And they want you to pay HOW MUCH for their SEO services?

Another way to look at it is this. Assuming 1,000 queries a month, assuming 27% (clicks on first place position) = 270 clicks per month. The cost to get 270 clicks in PPC is $1,212. So maybe you’re thinking you should pay $1,212 for PPC a month instead of SEO as it’s almost a sure thing. but you can only get 2.5% or 25 clicks per month if you’re lucky