SEMPO recently published a study which shows that a only 11% of all search engine marketing advertising is spent on search engine optimization, with the vast majority, a full 83%, is spent on pay-per-click advertising.

While pay-per click (PPC) advertising has enormous benefits, I'm a bit surprised by how much advertising dollars consumed on PPC when search engine optimization (SEO) can produce a significantly higher return on investment for the same marketing dollars. In fact, considering the number of phone calls my company routinely gets from people looking for optimization because they are spending "too much" on their PPC campaigns, I think that many businesses understand that SEO is more cost effective.

I know I have previously said that SEO is Dead, which some have taken out of context. Yeah, that headline is meant to grab attention, but the point of that post was that SEO-only providers need to adapt their optimization strategies into more marketing oriented SEO services such as usability, conversion tracking, etc., in order to continue to be effective at SEO.

While four out of five respondents to the study said they are engaging in organic SEO, the big money still goes to PPC. This means that either organic SEO is considerably less expensive than it should be, or advertisers are more comfortable with sponsored advertising which they can often manage themselves with little outside help and ROI can be tracked more easily and instantly. Further study into this would prove interesting.

I'm willing to bet that a significant chunk of those spending money on PPC but not SEO are doing so because they find few SEO firms that understand how to incorporate sales, marketing and usability into their client's sites. Many such companies simply don't want to change their sites in order to accommodate optimization which they fear inhibits their site's ability to sell. These site's are unwilling to re-design for usability issues and/or incorporate any textual changes for the benefit of the search engines. We've run across our share of these companies ourselves. Unless they are willing to make some changes, SEO will largely be ineffective.

Some of these companies spend a great deal of money on their websites, going through layer after layer of corporate bureaucracy just to get approvals. Part of this bureaucracy is often a marketing department that is unwilling to make any changes to the site they worked so hard at getting "just right".

Good SEO, however, is also good marketing. Many of our clients who manage their own PPC campaigns find that their PPC conversions often increase in conjunction with the optimization of a site. This is how it should be.

While future trends will undoubtedly show optimization marketing spend increasing in share vs. pay-per-click advertising, it will probably never overtake PPC simply because PPC is easy to set up, produces immediate results, and changes can be made online and effective almost immediately. Optimization is a long-term process that requires patience for results to be achieved, and continuous maintenance to stay "on top". PPC simply requires more money to stay on top.

What surprised me the most about this study was that paid inclusion accounted for 1/3 of the total spending on SEO. It's unclear on whether paid inclusion also includes directory submissions, but as Yahoo is currently the only paid inclusion provider AND one of the most popular web directories, this means they are getting somewhere in the neighborhood of $15-23M via their paid inclusion services. While directories are important, I have found that paid inclusion submissions generally are not important, except for some short-run campaign exceptions. That's a large chunk of money that would undoubtedly be better spent elsewhere.

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February 8, 2006

Stoney deGeyter is the President of Pole Position Marketing, a leading search engine optimization and marketing firm helping businesses grow since 1998. Stoney is a frequent speaker at website marketing conferences and has published hundreds of helpful SEO, SEM and small business articles.

If you'd like Stoney deGeyter to speak at your conference, seminar, workshop or provide in-house training to your team, contact him via his site or by phone at 866-685-3374.

Stoney pioneered the concept of Destination Search Engine Marketing which is the driving philosophy of how Pole Position Marketing helps clients expand their online presence and grow their businesses. Stoney is Associate Editor at Search Engine Guide and has written several SEO and SEM e-books including E-Marketing Performance; The Best Damn Web Marketing Checklist, Period!; Keyword Research and Selection, Destination Search Engine Marketing, and more.

Stoney has five wonderful children and spends his free time reviewing restaurants and other things to do in Canton, Ohio.

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