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What Produces the Greatest ROI: SEO, PPC or Social Media

Marketing

This is a very personal article because it is entirely my own opinion based on my own, empirical experience. I head up an Internet marketing company which offers a full range of online services, and the three core strengths of my firm are SEO, PPC and Social Media. Of these three, which single technique delivers the greatest Return on Investment (ROI).

My Personal Bias and Objectivity

My firm handles clients across the country and overseas, and if we have a service bias I would say we have 40% SEO clients, 40% PPC clients and 20% Social Media. Of all three services we have offered SEO the longest.

With that admission, let’s turn to what has been the most successful at generating ROI for clients and for my own businesses.

SEO – Search Engine Optimization

The greatest ROI generating activity is Search Engine Optimization (SEO). By far and away, SEO produces the lowest cost per lead, the largest volume of leads and the best leads in terms of quality. The same also applies to online sales where there is an eCommerce function: again SEO visitors trump PPC and Social Media in terms of quality and also in terms of the size of purchase they are prepared to make.

The drawback with SEO is that it can take some time to get to the ranking sweet spots for the selected keyword terms. There is also the risk associated with failing to get the keywords right, gaining ranking for them but only to find they do not convert. Overall though, good quality SEO work improves the health of the entire site, so it is not a major deal if you have to tweak the keywords you are looking to rank for and switch direction.

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For my money, I invest in SEO first.

PPC – Pay Per Click

I like to run SEO and PPC at the same time wherever possible, because PPC is extremely sensitive and responsive. In some instances, PPC is better than SEO, especially for high-value, short term campaigns. Overall though, I relegate PPC to second place because though it is fast and you are able to establish absolute financial control, there is no long lasting benefit from PPC.

A big issue I find with clients allocating budgets is that they go for the quick fix provided by PPC. Success with that allocation leads to further allocations, more success and a repeat of the cycle. What happens is that SEO takes a backseat to the PPC train, and the budget allocation becomes heavily biased to PPC over SEO.

This is a bad move from a business perspective. SEO consistently provides better leads, more sales and more ROI than PPC, plus once you start PPC you are effectively in a position where you must keep on paying or cutoff your pipeline. In my opinion, clients need to see past the short term and think about the long-term health of the pipeline they are creating.

Social Media

Now this may get me into trouble with a lot of people, but the ROI does not lie. Social Media does not generate significant ROI in my experience. More than this, the leads and sales it does generate are not usually of such great quality, and for a small to medium-sized business, the sums recovered over the investment do not typically result in a positive ROI.

What I’m saying is: Social Media does not result in a positive ROI. Facebook Likes, Google Plusses or a mention in LinkedIn are not reliable ROI metrics to measure. At present, I consider Social Media has no place in the online sales function and should be relegated to the marketing department where brand awareness and consumer education are more important.

This doesn’t mean there is no place for Social Media – far from it – not least because it is a ranking signal for SEO. But what it does mean is that you must be very careful in terms of budget allocation and understand exactly what is being measured to produce your ROI.

Takeaway

SEO first and it should take most of the online marketing budget. PPC second and typically run alongside your SEO campaign – use PPC as the scout for testing new keyword terms and markets. Social Media a distant third, but this may change as the advertising and monetization issues become worked out, but this not today.

Comments on this Article: 22

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  1. Bill says:

    I agree with the overall message of this post, but I think it’s a bit more complicated than just allocating 40/40/20% of a budget to specific areas. For example, it usually makes sense to spend more on PPC upfront, before SEO efforts have been fully seen/maximized, and then gradually scale back PPC spending once you’re receiving more organic traffic.

    Even once *hopefully* dominating your market organically, it’s often a good idea to keep a small PPC campaign going, mostly for branding and “intangible” benefits.

    • Hi Bill – thanks for the comment, but I’m not advocating a 40/40/20 split – that is just the split of our client work here at Andersen’s (and it’s a rough breakdown as we also provide a range of other services too).

      I agree with maintaining a PPC activity also -I view PPC as the scout for new keywords and SEO as the heavy infantry which is deployed to take new ground.

  2. As a mobile app developer my opinion may be biased however I think you are doing a serious disservice by not including any real mobile strategies. IN a recent article by information week they showed the average roi of a mobile app being $1.67 for every $1 spent. I think this is a great article however it is missing a big part of the equation.

  3. I do think though in the future your going to have to think about how these things relate to mobile apps just as much as they do websites.

    sincerely,

    larry addles
    http://www.abmobileapps.com

    • Hi Larry, thank you for your comment.

      I see the explosion of growth in Mobile Search and certainly the extraordinary strides taken with mobile apps, but my view is that Mobile is not taking share away from traditional search, but rather adding to it.

      I’m also not convinced that Mobile Search is where B2B decision making purchases are being made, which is also where the bulk of our clients reside (rather than retail) plus the data we are getting from eCommerce clients does not support the notion that Mobile is taking ground from desktop search, in fact we are seeing traditional search taking advancing in share (but that is a small number of clients compared to the market- we are certainly not YP).

      Care to give me a guest post for my blog on mobile apps – I’d be very interested to get the views of an expert on this (and I am not)?

  4. For being a very personal article, you bring clarity to each of the three very quickly. I like that, and I completely agree with you.

    As addressed in the SEO section, it might take a while to see results from SEO. I think that a company shouldn’t really expect any significant increase in traffic or conversions for at least a year. Especially if the website is brand new or if it’s a complete mess from an SEO perspective.

    When it comes to PPC, I agree that implementing SEO and PPC campaigns can be extremely valuable when done at the same time. If you’re thinking about making an investment in SEO, you (a small/mid-sized business owner) should understand that establishing PPC campaigns will address a long term problem with a short term solution.

    I could supplement the social media section, but I’ll save that for another day.

    Cheers!

  5. I think what your saying my be a little too generic. Your comparison doesn’t consider what you are trying to generate ROI for. If you’re trying to build loyalty, will SEO still win or will social because it allows you to build a relationship. I think many people make the same comparisons because they only think in terms of quick-sale, new lead etc. Well that’s fine, because Google keeps working hard to minimize the effect of SEO. SEO is much less relevant than it was a few years ago. Remember the old days of Google when SEO-experts could get garbage ranking on the first day? Now much SEO is achieved simply by having a GOOD content. Social Media often doesn’t work because people start pushing WAY too many messages and inflating their following with people who are irrelevant to their target audience. Social Media takes time because it requires building relationships and trust.

  6. Hello Kimberley-
    In my eyes, ROI is cold hard sales cash over the cost of generating those dollars. Not visits or Likes o any other non-monetary metric.

    I have a serious problem with Social Media because I don’t see relationships being built period. I think at this stage, there is too much which is ephemeral and vicarious going on to be able to make a determination that someone Liking or Plussing on SM is actually interested in forming a relationship of any kind.

    If what you say is true about taking time to form trust, and I agree with you 100% on that, then that itself is going to skew the costs involved and extend the time horizon for conversion considerably. I have a real problem convincing clients to part with investment for that activity compared to SEO and PPC, where ROI can be much more clearly defined, which is why I relegate SM to such a distant 3rd position.

    I also think that SEO is not less relevant, if anything it is increasing in relevance, but it is simply one route to online markets amongst an increasing number of others. I don’t agree either with the idea that it is just good content – I ran a test some months ago in the post-Panda world, with several sites which had equally good, original content – one set we did nothing with except post to the site blog, but the other set we SEO’d and guess what, the non-SEO’d sites hardly rank while the SEO’d ones have done well. That proves to me, that at the moment at least, SEO is still relevant.

    Again, if you would like to counter my position with a guest post, I would love to publish your opinions on this.

  7. “Social Media has no place in the online sales function and should be relegated to the marketing department.” I agree mostly with this statement. Many clients expect social media to be a sales channel and hope they are able to sell products via Facebook posts and Tweets. As you mentioned Social Media is best for audience engagement and brand awareness, not sales. However, I do think that social media needs to be communicated across departments. Marketing who does the social media communications may find sales trends and demographic information from the social networks that are good pieces of information for the sales department to have.

  8. In reference to your above reply to my comment, I would love to do a guest post that supplements the social media section in this post. How would you like me to submit it to you?

  9. Jay says:

    I myself would agree with you. I get my best return on investment from seo as well, ppc can blled you dry if you do not know what you are doing, and social networking is hit and miss it all depends on how targeted your followers are to get a good R.O.I.

    Nice post.

  10. Reico says:

    Foe me SEO is number one. It’s a long-term investment that should not be ignored. PPC can go south very fast and there is really no roon for error. Effective social media is on the rise and coupled with SEO is a very good method of capturing targeted visitors.

  11. Things aren’t that clear cut – they overlap. For instance, your social media efforts can have a significant impact on SEO. How then can you split it into separate percentages?

    • I disagree Jeremy because I think things are that clear cut…SM has not delivered the ROI for small to medium sized businesses that was hoped and my %’s are the client work split within my firm, not a recommendation on how an individual firm’s marketing budget should be divided up.

      That did get me thinking though: just what should a client online marketing budget be split up into? Personally, and this is a very personal piece, I am launching a new business in the pet treat industry and my allocation is likely going to be 40% SEO – 25% digital ads – 25% SEO – 10% Social Media – for the first quarter. My feeling is I will see a good return on the SM spend which may justify increasing that budget because I think the pet niche is eminently marketable socially (cute dog pics and all).

      Note I have no budget for PPC – (a) because I have some tested keywords already and (b) my margin will not support a PPC budget to acquire individual customers.

      We’ll have a market view on Facebook’s potential today though – they have a slew of shares coming to the market so let’s see if the price rises or falls.

      Again, if you would like to guest post for me, I am very happy to have an opinion challenging my own views if you are interested.

      Thanks for your comment.

  12. Paula Johnson says:

    Although ROI is hard to measure for Social, I believe that ultimately it is and can affect a companies bottom line. Example: one tweet sent out complaining that a company is not responding to a request for demo(huge buying sign), competitor sees tweet, replies and gets the sale. One companies brand has been somewhat damaged, and a sale lost (market share), competitor gains. All from one tweet. You just need the tools to harness the channels.

  13. Mandy Mode says:

    This a very relevant post for small business marketing professionals like me. My company has a great “white hat” local SEO/PPC approach and we have a hard time competing against the national franchises in our space. We are always evaluating how to allocate funding and man hours. I think your formula is spot-on.

  14. I agreed with this relevant post. In my view, social media should have a less percentage in all over investment. Social media performs well in advertise but not so much as compare to SEO and PPC. So percentage distribution is SEO : PPC : Social Media :: 40% : 40% : 20% accordingly is right.

  15. Sure Karl, What would you like the topic to cover and when would you like it?

    Sincerely,

    Larry Addles
    http://www.abmobileapps.com

  16. I would believe that SEO produces the most ROI, given that SEO can actually be done “for free”. However, SEO will only ever bring in a positive ROI once you start getting organic traffic. A PPC campaign goes great alongside an effective SEO strategy to help maximize ROI.

  17. Karl – mobile and ratio’s aside, I think your right on track with your assessment that cash-in-the-till ROI flows SEO > PPC > SMM.

    A good call on your part… well done.

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