WHAT SHOULD YOUR SEO BUDGET BE?

You need to have a very clear idea of the economics underpinning your web site business if you are to make the right decisions and achieve sustained profitability.

In this article we'll look at some of the critical questions involved in establishing an appropriate search engine optimisation budget.

If you have crunched your numbers, you will know, at least approximately, the average net profit on an incremental sale of your product or service.

If you have invested the time in analysing the performance of your web operation, you will have an idea of the rate of conversion from web site visits to sales.

And, if you know these two things, then you can calculate the value of additional traffic to your web site as a result of search engine optimisation...

A Simple Case Study

Widget.com make an average net profit of £50 on each widget they sell (OK, so they're expensive widgets!)

Widget.com estimate that the conversion rate - from web site visits to sales - is 2%.

Widget.com are confident that effective SEO will increase monthly visits to their web site by 200, resulting in 4 additional sales and an incremental profit of £200.

Widget.com are a pretty conservative bunch and want to be confident that their SEO investment is recouped through incremental profit within 12 months.

Given these facts, Widget.com are in a position to establish an appropriate SEO budget. Their prediction is for incremental profit of £2400 per annum as a result of efficient SEO, so this would be the upper limit of the investment they would make in search engine optimisation.

But That's Too Simple!

Of course it is.

Estimates of average net profit, conversion rates and additional traffic from effective search engine optimisation will be just that - estimates, that will prove to be more or less accurate.

You could of course, though, use your calculations to establish a performance-related agreement with your SEO company that will minimise the risk of your SEO investment - fees being dependent, for example, on additional web site traffic actually achieved!?

It's also worth noting that you would have to be a really cautious person to insist on getting a full return on your SEO investment within 12 months, given that incremental profits are likely to be earned way into the future as a result of increased traffic generated by higher search engine rankings.

But this simple case study does highlight the key factors to be considered when trying to establish an SEO budget.

If you need assistance with setting your SEO budget or with spending it in a way that will generate increased search engine rankings, increased search engine referrals and, therefore, ultimately net profit for your business, please get in touch.