Did you know that nearly 95% of B2B buyers begin their purchasing journeys on the search engine? This translates directly to B2B and Technology businesses generating 2X more revenue through organic search than any other channel, and it’s only growing year over year, according to this study by Bright Edge.
Though industry-leading marketers have long since been investing in digital channels, as of 2015, B2B businesses have increased their budget for digital marketing initiatives on average by 14% yearly. To quantify this, U.S.-based companies spent $776 billion investing in digital marketing channels in 2020; of this, nearly 10% was invested in SEO.
What does this mean for your SaaS product company and digital marketing spend? In this article, we’ll discuss how much money B2B businesses are investing in SEO, how to determine an appropriate SEO budget, and how SEO could be your business's most profitable customer acquisition channel.
As mentioned in the preceding paragraph, SEO spending has hit nearly 10% of total digital marketing spend for B2B businesses reaching an estimated $79.3 billion. However, for readers familiar with search engine optimization, that number may be confusing as organic search is generally considered a lower-cost channel with significantly higher upside ROI.
This spend is derived from over 1 in 3 businesses leveraging an external SEO agency instead of an in-house SEO team. This poses the question:
Whether your business should hire internally or leverage an external SEO agency is a commonly asked question. However, the common thesis is still sound: an SEO consultant has designed and implemented dozens of SEO strategies and is constantly exposed to best-in-class tactics in various industries. In contrast, an in-house SEO resource has a significantly narrower scope.
When there is a clearly defined goal or deliverable, an SEO consultant can quickly begin producing actionable recommendations given their experience solving similar problems for other businesses, while the time to onboard a new in-house resource will take longer.
This is quantitively backed by this report by Borrell and Associates that shows businesses who do use an external SEO agency report lower costs and higher return on SEO investment overall as opposed to their in-house SEO counterparts.
While there is no well-defined formula for how much your SaaS business should be spending on SEO, there is a set of questions that, when answered, can guide you in the general direction of how much you should spend on SEO given your goals and the competitive landscape of your market.
Where does my target audience find my business? Given that 95% of B2B technology searches begin with Google, it’s more than likely that your ideal prospects are searching Google for a software solution that fits their needs.
Are my primary competitors investing their digital marketing budgets in SEO? If your competitors are ranking at the top of the SERPs for industry-relevant keywords, then you will likely need to invest more in SEO to remain competitive.
Is my website currently optimized? Consider how your prospects are presently engaging with your website; if you’re in the B2B SaaS industry and your conversion rate is lower than 2.1%, your website is performing below average and could affect your rankings in the search engine.
What stage is the maturity of my SaaS product? It’s common for a well-established enterprise marketing budget to entail anywhere from 8% - 12% of their total revenue. This should be closer to 25% - 30% if you're a younger growth stage business.
While answering these questions will allow you to begin sizing up the importance of SEO to your SaaS product, there is another set that will support assigning an actual numerical value to your SEO investments.
While these methods will range from a percentage to a defined calculation, each is a viable method for calculating your SaaS business's SEO budget.
In SaaS industries, the search engine is often very mature, and organizations aggressively target keywords. To maintain a share of organic traffic, you can assess what your competitors are spending and measure the potential gain and loss of losing customers vs. acquiring their potential customers.
By leveraging a tool like Ahrefs or Semrush, you can see the total organic traffic your competitors are broken down by page and estimate the average value generated from their potential customers using this formula: Organic Traffic x Average Conversion Rate (2.1%) x Average Value of Prospect.
This number will ultimately vary depending on your organization's revenue. Still, more often than not, we see our clients invest anywhere from 5% - 10% of their total business revenue in growing their search engine market share.
Their SEO strategies are typically intertwined with their PPC or paid advertising budgets to maximize their overall search engine exposure. Luckily for you, we’ve written this comprehensive guide to leveraging PPC and SEO in parallel. Though it is important to note that while the time to value PPC campaigns may seem attractive with new user privacy updates, the CPC on paid ads is higher, and once you stop running ads, your visibility drops. This is why the most scalable solutions leverage the two in parallel.
Organic traffic is a flywheel, and your investment in SEO compounds over time, especially when you consider its benefits throughout the entirety of the customer lifecycle, from prospects to customer retention and brand loyalty. Leveraging this perspective, you can begin to view the lifetime value of a customer and budget your SEO through this lens.
Let’s say you have a blog article with 3,000 monthly visitors that converts its visitors to an MQL at a 1% rate. From here, you can expect that you can convert the 30 MQLs to customers at a 20% rate meaning six net-new customers per month, each of which has an LTV of $10,000, meaning this blog post generates over $60,000 in potential LTV revenue per month, leaving massive commercial upside for return on SEO investment.
It’s essential to think about your SEO goals in the broader context of your marketing KPIs. For example, if you’re tying your organic traffic goals to MQLs, the required investment to attract and convert high intent traffic will vary significantly as opposed to using organic traffic to gain the top of funnel traffic/visibility or authority in your industry.
As you begin calculating your SEO investments, you may arrive at a higher number than you originally anticipated, so here are several helpful insights that back a more significant allocation of budget towards SEO.
There is a strong correlation between SEO spending and overall success, and the organizations that invest in best-in-class SEO strategies are consistently the same ones that sit on top of the SERPs. Therefore, rather than spreading a smaller digital marketing budget across several channels hoping for a jackpot, it’s better to allocate budget responsibility to one or two channels with the largest potential upside to create the highest overall yield.
In its most diluted form, search engine optimization drives organic traffic, organic traffic converts to leads, leads convert to revenue, and revenue contributes to business growth. By improving your website's search engine ranking, you create an organic flywheel that continues to generate more leads and website attributable revenue for your business over the years as opposed to the weeks or months that are sustainable with channels like PPC.
At AccretionEngine, we aim to strike a balance between time to value and long-term sustainable growth by holistically analyzing your website and identifying the low-hanging fruit that’ll begin driving organic traffic immediately and long-term content goals for competitive strategic keywords that will drive the high intent traffic that converts to customers. In doing so, we’ve developed an alternative to traditional agencies' stale retainer-based delivery models and instead tie our engagements to deliverables, so you’re not paying. At the same time, you wait for your website to rank. Instead, we focus exclusively on the strategic outputs that move the needle, so you’re only paying for the solution that fits your business's needs.
If you’re interested in seeing how organic traffic can fuel your business's growth and how AccretionEngine’s methodology to SEO can support these initiatives, book a call with us; we’ll come prepared with a free traffic projection analysis for your website.