SEO budget strategies that work for you

It can be difficult to figure out how much you should spend on SEO, especially if you have been thinking of organic traffic in a ‘free’ way.

how much to spend on SEO

The steady rise in SEO spending is a sign that marketers are realizing the importance of SEO in helping potential customers find their offerings. To increase their organic reach, US companies invested an estimated $79.3 trillion in 2020.

Even if you are aware of the importance of SEO to your marketing, it’s still a challenge to decide how much to spend. There is no one formula for setting an SEO budget. However, there are some strategies that you can use to get the right number for your company.

How to reduce your marketing budget

Recent data shows that B2C companies spend an average 5%-12% of their revenues on marketing. B2B spends about 8%-9% of their revenues on marketing. According to Forrester research, half of the companies’ marketing budgets go towards online strategies such as SEO, direct mail, social media, and data analytics. You’ll spend more on digital strategies if your business is entirely online.

Sample SEO budget breakdown

The 2021 CMO Survey shows that nearly 74% invest in SEO. Each business has different needs. The amount that you budget will depend on your niche and business model. However, it is helpful to see some examples.

Based on the same survey data, the following chart shows average budget breakdowns of different types of companies (B2B and B2C), with different levels of revenue.

SEO budget examples for companies

This table shows what your total marketing and SEO budget could look like at a high level.

Let’s dig a little deeper. How do you plan to allocate that budget effectively so you can achieve your annual marketing goals?

Five ways to figure out how much you should spend on SEO

There are many options available when budgeting for SEO. These methods can be based on marketing metrics or rough percentages.

1. Contribute a portion of your total marketing budget

How it works

Based on the amount of website traffic you use to generate sales, set aside a portion of your digital marketing budget. An e-commerce company, for instance, might choose to spend more SEO than their brick and mortar counterpart.

The same thing can be done with a flat amount of money: Look at the line items in the marketing budget to determine what you can afford for SEO.

Keep this in mind

Your SEO needs are not being met by allocating a large percentage of your marketing budget.

Your SEO budget should not be based on your financial capabilities. This could lead to you not getting the results you want. Backlinko conducted a comprehensive analysis of SEO services and found a direct correlation in satisfaction. Data shows that people who chose low-budget SEO were less satisfied than those who spent more on SEO as a marketing channel.

2. Match your competitors

How it works

Companies that are aggressively targeting industry keywords must invest more in SEO to retain a portion of organic traffic. Compare your search engine rankings with your competitors and calculate the potential cost of losing customers.

Keep this in mind

Although this approach can help you determine how much SEO to prioritize, it won’t get you far. Next, determine how much SEO you will need to rank above your competitors. You can request a complimentary SEO consultation.

3. Take into account your marketing goals

How it works

Before allocating a dollar amount to a line in your budget, think about your SEO goals within the context of larger marketing objectives.

SEO: Where does it fit in? With a realistic outlook, think about your organic search potential. Is your focus on organic traffic growth in order to achieve key KPIs such as leads and sales? Are you achieving your revenue goals while expanding brand awareness? You must set clear expectations and invest enough money in marketing channels to get the desired results.

Keep this in mind

To align your budget with your goals, it takes careful planning. However, this will ensure that your funds are allocated in a way that supports you.

4. Calculate budget using Customer Lifetime Value (CLTV)

How it works

Organic traffic has many benefits beyond just a single purchase. This is especially true if you place emphasis on customer retention and satisfaction. This method determines the web page’s value based on Customer Value (CLTV), which is the long-term amount of money you can expect from a customer.

Let’s suppose your website has a transactional page that receives 10,000 visitors per month. You can sell to 100 customers per month if you convert 1% of your visitors. If your CLTV is $3,000 your web page will be worth $300,000.

This figure can be used to determine how much you should spend on SEO. You might want your SEO strategies to increase traffic by 10% and generate an additional 1,000 visitors per month. This traffic, with a conversion rate of 1%, will bring 10 new customers to your SEO investment, which in turn will give you $30,000 worth of value.

Keep this in mind

SEO or CRO? If budgeting is for SEO, then SEO. If you are using CLTV to determine page values, be aware of the various factors that impact conversion. You can increase the profitability of your SEO efforts by increasing conversion rates through CRO and UX investments. These two marketing strategies can be combined to increase the bottom-line impact.

5. Determine the effectiveness of SEO and paid search spending

How it works

SEO can be budgeted in conjunction with your PPC advertising spend. This is based on the effectiveness of each marketing strategy.

According to MarketingSherpa, most companies are comfortable spending more on PPC than they do SEO. SEO generates more traffic than SEO. According to research, organic search generates 53% website traffic on average, while paid searches generate about 15%.

How about e-commerce conversions Closed deals? You can compare your data between paid and organic traffic to see the ROI. Also, make sure you have comparable budgets that are consistent with your returns.

SEO can bring more quality visitors to your website. You might consider re-allocating your digital marketing budget to reflect the higher returns on your investment. This comparison between SEO and PPC is comprehensive.

Keep this in mind

Although PPC can produce quick results, visibility will drop once you stop running ads. An optimized website can build momentum and drive traffic long-term. You can mix SEO and PPC to meet your changing business needs.

Increase your SEO budget

You might be surprised at the results of your calculations when you try to determine how much you should spend on SEO.

It is possible that your budget stakeholders don’t understand the value of investing in SEO. Here are some helpful points to communicate.

Bargain-basement SEO won’t deliver significant results

There is a correlation between SEO spending and satisfaction. Backlinko showed that customers who spent more than a minimum threshold were 53.3% less likely to be extremely satisfied than those who spent less.

SEO is more effective than other channels

SEO is a relatively recent digital marketing channel. You don’t have to prioritize it in your budget just because you or your stakeholders aren’t comfortable with it.

SEO has many stats you can communicate with your stakeholders to support prioritizing SEO to achieve the highest ROI. Consider the following benchmarks.

SEO efficiency in comparison with other traffic acquisition channels

Let the numbers speak for themselves and plan your budget keeping your final ROI in view.

Online advertising is being affected by privacy changes

SEO is a powerful digital strategy in today’s evolving online environment.

Google and Apple have introduced privacy restrictions on third party cookies. This is a move that will reduce the effectiveness digital advertising strategies. These changes won’t affect the first-party cookies that you use to track your customers on your site.

SEO budgeting that works for you

Each person’s budgeting process is different. You can adapt each method to match your annual goals. Talking to an SEO consultant is the best way to plan your SEO budget. SEO marketing agencies often start with a complimentary SEO consultation.

It helps you to identify the best SEO opportunities and determine the right level of investment to achieve the desired results. It’s a great way to ensure you are investing at the right level before you commit any budget dollars.