The real importance of search engine optimization is not about the technicalities of getting it done. The importance of SEO is about tapping into the addressable market potential for a business who knows how to convert sales.
The technical requirements and strategies of ranking high in organic listings is not rocket science (then again, I’m probably considered a rocket scientist when it comes to SEO.) The true hurdles of search engine optimization and answering the question of ” why is SEO important? ” boils down to some simple business fundamentals.
Imagine this scenario
Your company purchases $25,000 a month in adwords.
You are in a highly competitive marketplace that has multiple layers of advertisers trying to reach the same target audience.
Your SEM campaign represents 100 high-value keywords that average $10.00 per click.
On any given month your $25,000 budget translates to 5,000 unique, highly targeted visitors.
You maintain a consistent conversion rate of 2.5%
Your 5,000 unique visitors equals 125 new customers per month.
Your total cost per acquisition is $25,000 bduget / 125 customers = $200 per new customer
Over a twelve month period you will spend $300,000 and get 1500 new customers.
Of the 100 high-value keywords in your SEM campaign you are buying %100 of the available advertising.
This 100% equals only %25 of the available market.
For every one person who clicks on your SEM advertising, three people click on the natural search category.
If a new client creates $1000 in revenue, 1500 new customers from SEM create $1,500,000 in revenue.
If you had similarly ranking results in organic SEO listings, 4500 new customers from SEO create $4,500,000 in revenue.
Credibility and Brand Recognition
As individuals we have been subconsciously trained to value personal recommendations and expert opinions at a higher rate than paid advertising.
The act of searching on a service like Google, Yahoo, or Bing makes most of us take any advertising with a ‘grain of salt’ even when we do click on a button. We inherently know that advertising is intended to sell an idea, product, or service to us.
If you find two products online and one is from paid advertising and one is from an expert article. Most individuals would be more inclined to select the prodduct mentioned in an (apparently) unbiased result.
This selection means that the store selling the shoe has a higher conversion rate on this portion of the funnel. If the above 2.5% conversion rate created 1500 new customers using SEM, a slightly higher conversion rate of 2.75% could create 4,950 new customers.
A difference in annual revenue of $1,500,000 through SEM versus $4,950,000 via SEO.
If we were to select the product based on an advertisement we clicked on, many of us would likely go into a price competitive comparison of other advertisements.
By default of using advertising as a choice of selection, many consumers in the SEM funnel are price shopping. These are not loyal consumers, merely opportunity shoppers. From a business perspective these consumers are placed into a constant state of arbitrage as they wait for cheaper options to appear.
Questions you should ask yourself about SEO and SEM
- Do you want to pay for every click?
- Are you looking for opportunity shoppers or loyal customers?
- Does your company sell on price or value?
- Do you want 25% of the market or 75% ?