PPC vs SEO: 5 Things To Consider

Over the years, one of the questions I’ve heard most often from marketers and business owners is “Would PPC or SEO be better for my business?”

It’s a valid question. While both strategies can provide great ROI, picking the wrong tactic can burn thousands of dollars and set your marketing strategy back by months. Since you probably can’t afford to throw money away, it’s important to determine which approach best fits your needs and budget.

 Every business and market is unique, but fortunately there are some general rules of thumb that seem to hold true for most companies. Ideally, you’d be able to use both PPC and SEO to full effect; but, if your budget isn’t big enough for “ideally,” here are 5 tips on how to decide which approach is best for your business.

1. Clarify Your Goals

Before making any sort of SEO vs PPC decision, it is critical to identify what your goals are for online marketing. In other words, what does a successful online marketing campaign look like to your business?

You’d be surprised how few people have a ready answer to that question.

Many businesses start a marketing campaign simply because they know it’s an important venue for their products and services; however, they haven’t really identified what they are trying to achieve. If your campaign goals don’t serve your business needs, you might as well give your money away.

The problem with the whole “if you build it, they will come” philosophy is that, yes, SEO or PPC campaigns will bring people to your site. Unfortunately, if traffic to your site isn’t driving business for your company, all you’ve built is a field of dreams.

With that in mind, let’s take a look at the top 4 reasons business owners tell me they want to do PPC or SEO marketing:
I want to outrank my competitors!

I get it, second place is first loser. However, it’s important to remember that ranking #1 on organic or paid search doesn’t mean your business will improve. Rank is a component of success, but defining success by rank position is a good way to lose money.

Note, I do strongly recommend using an AdWords campaign to bid on your own branded terms–especially if your competition is already doing so. When done correctly, it costs very little and provides effective brand protection.

1. I want to be #1 for search terms X, Y, and Z!

The classic “When you think of fans, think Dan’s” type approach. It’s great to be the first thing people see or think of when they look for “fans;” but, if the competition, search volume and cost of your search terms aren’t right for your business objectives, you might end up putting a lot of time and money into something that does little for your bottom line.

2. I want to get our name out there

Social media is actually a great way to achieve this objective. If exposure is your biggest goal for an online marketing campaign, social media can often provide a great boost at a relatively low cost.

3. I need to increase sales

Ah, here’s a goal that actually links online marketing to a business goal: making money. The biggest potential issue here is profitability–if the profit margin is too slim to absorb marketing costs, the campaign probably doesn’t make sense.

Ultimately, we’re all in business to make money. If you can’t directly link your online marketing goals to improved profits, you’re asking for trouble. On the other hand, if you know how your goals translate into business success, those same metrics can be a powerful tool for evaluating and refining your marketing efforts.

2. Calculate Your Customer’s Lifetime Value

An online marketing campaign is an investment. The hope is that the money you make for your efforts will be more than you spent in the exchange. The feasibility of PPC or SEO will depend on your industry, market and margins. If you can’t make the profitability equation add up on paper, there’s no way it will work out in real life.

At Disruptive Advertising, we always run a LTV analysis to see if PPC makes sense for potential clients. In a recent conversation with a photo studio, the client estimated the LTV of a new customer was $100. Based on our keyword research, we predicted that PPC would cost $40 per customer. Since their operating costs were $70 per appointment, each new customer would have cost the studio $10! We both decided it wouldn’t be a good fit.

This is why appropriate goals are so important. Sure, we could have doubled their customer volume, but that would have cut their profit by a third. Hitting our marketing metrics would have hit their bottom line…hard. By correctly identifying the customer’s LTV and the client’s PPC goals, we saved everyone a lot of heartache.

As a general rule, PPC works well when customer LTV is high. After all, every click costs you money! SEO, on the other hand, tends to be a better fit for high volume, low LTV situations. In either case, the most important goal is profitability.

For a quick and easy way to estimate customer lifetime value, check out our handy calculator here.

3. Decide What You Can Afford

It’s the age-old business conundrum. You have to spend money to make money, but what’s the best way to spend very little and make a whole lot?

Unfortunately, many businesses start with a small budget and big expectations, which is rarely a winning combination. While there are exceptions to any rule, I’ve found that a good small business SEO budget works out to around $2,000-4,000/month (you can read an excellent discussion of SEO costs here). A good PPC budget starts around $7,500/month.

Depending on your market, you can see some success with a smaller budget, but you typically get what you pay for. Don’t buy into the idea that you can get something for nothing. If you want real results, you need a real budget to work with.

4. Look at Your Timeline

How soon do you need results? Successful SEO takes time. You can get a successful PPC campaign up and running today.
Generally speaking, if you can wait 3-6 months for the campaign to really hit its stride, good SEO will generate much cheaper leads than PPC. However, if–like most of us–you are in a rush for results, PPC is the better option. That speed comes at a cost, though. After all, that’s the AdWords business model: you pay for position.

Even if you have the time to wait for SEO to mature, you may still want to use PPC to test the viability of your SEO plan. If PPC ads in the space you’re trying to enter don’t yield compelling results, SEO probably won’t either.

Overall, the response time of PPC campaigns makes them a great option for most businesses, provided they can afford the position premium.

5. Identify Your Existing Resources

One often-untapped online marketing resource is current employees. Even if you can’t afford to start a full-fledged SEO campaign, you can use your existing team to generate content that will put your company on the search engine map.

At Disruptive Advertising, everyone gets a chance to blog once per month about theirlatest wins or losses, business insights or industry-related topics (click the links for sample posts). It gives us all a change of pace, keeps everyone up to date, and provides great SEO results without increasing our hard costs.

While using on-site resources may not be quite as effective as running a dedicated SEO campaign, it can be a great way to improve your SEO presence without breaking your budget. For many companies, this gives them a way to deal with the PPC vs SEO conundrum–the company can spend its cash on paid search and still pick up some extra organic leads.

Summary

There’s no simple answer to the PPC vs SEO debate. The online marketing approach you choose will depend on your business goals, customer LTV, budget, timeline and existing resources. Of course, there are other market-specific factors to consider as well, but thinking your way through each of these elements will get you pointed in the right direction.

You’ve heard my take, now I want to hear yours:

What approach is right for your business…and why?