The ability to generate quality leads can determine the fate of an overwhelming majority of new and established businesses alike. In the ever-increasing digital world that we live in, to say that competition for internet based leads is fierce would be a gross understatement. Last year we put out a post illustrating the exponential spend on internet marketing that will be occuring over the next decade. Today we’re going to talk about how to think critically about which type of internet marketing spend is right for you or your company, and particularly the differences between search engine optimization (SEO) and search engine marketing (SEM).
 

SEO vs SEM

Before diving into this topic, it’s important to keep the goal in mind. The end goal is to generate sustainable cash-flow for your business via online marketing methods. This might seem silly to reiterate, but sometimes we get lost in strategy and marketing lingo and forget that the reason we are here in the first place is to make money.

Now back to the topic at hand, seo vs sem and which to choose. It makes sense at this point to give a high-level overview about what each one actually is, so lets do that first.

What is SEO?

Search engine optimization can be most accurately described as the following:

Actions taken to increase organic search rankings of an internet presence — rankings are also referred to as position on a search engine results page (SERP). Some of the most common activities that take place in SEO are keyword research, blogging, using tools like Google Analytics and Google Search Console to analyze query data and search statistics, website structure optimization, user experience optimization, etc. You cannot pay a company to get you a top result on Google or any other search engine for a keyword. You can pay a company to employ practices that are
known to increase the likelihood that your website will move up in rankings.

If you’d like to learn more about SEO in particular and how to get started on your own, visit our blog that talks about how to be found on Google.

What is SEM?

Search engine marketing can be most accurately described as the following:

Money spent by a company for the purpose of increasing traffic to an internet presence. Generally, the amount of spend will have a very high and predictable correlation to the amount of traffic those funds generate. SEM often takes the form of paid search ads a on search engine (Google/Bing/Yahoo), Google Shopping Ads (this one in particular has been an excellent avenue for ecommerce businesses to pursue although the setup is rather complicated), display advertisements, etc. SEM advertisements can be purchased on a CPC and CPM basis.

If you’d like to learn more about SEM marketing in particular, visit the WeSpotlight blog that talks about CPC vs CPM and how to make good decisions when determining your SEM budget.

SEO Strategy & Spend Considerations

Having great SEO for a top keyword is both valuable, rare, and hard for competitors to imitate. I bring up these three qualities in particular because I’m an advocate of the VRIO framework, an evaluation methodology for determining sustainable competitive advantages. The VRIO framework is a well known methodology employed by business strategy teams. Ranking #1 for a highly competitive keyword absolutely qualifies as a sustained competitive advantage with regards to my personal interpretation of VRIO and how it is applied. That said, let’s take a look at all of the major benefits of SEO:

1. Organic search traffic is known to convert at a statistically significant higher rate than paid traffic. For the clients I’ve worked with I have sometimes seen 300% – 500% higher conversion rates on organic traffic over paid traffic.

2. There is no out of pocket cost in paying for the real estate that has been claimed by your presence on a search engine results page. Depending on the competitiveness of the query keyword you’re going for though, it likely will have cost you or someone your paying 100s of hours of hard labor to get there.

3. High organic search results is great for branding. Achieving high organic rank is a statement to your customers, clientele and competitors that Google recognizes you are the best; Google has determined you are the absolute best possible destination to serve the information a person is seeking for a given keyword – and that keyword is now a living component of your brand. Paying Google to promote you is not impressive – anyone can pay someone to do something. Organic results are saying to people who see you that Google respects your company, and that Google with it’s unlimited resources has determined you are the best and put you at the top for a reason.

4. Good organic search results are a tangible business asset, and any business person who doesn’t think so is living in the stone ages. If you build a brand that isn’t profitable, but you’ve gotten to the top of search results for tons of competitive keywords, the value of the company based on SEO alone could be tremendous (think every cash-flow negative media startup ever).

5. Investing time or hiring someone to work on SEO is investing in the long-term future of the company. Even if it doesn’t pay off today, SEO investment in the aggregate over time will lead to positive cash-flow recognition if in the hands of the right people.

Some Drawbacks of Investing in SEO to Consider

• Particularly for new companies, it can take a very long time to see positive return on investment from SEO efforts. A new company competing for space on SERPs for top keywords is like trying to get a job at Goldman Sachs straight out of college. I’d even venture that the few companies that do get on top of SERPs as soon as they start up went to the same schools as that are Goldman Sachs targets. Analogy aside, this is tough stuff to accomplish, it’s an ongoing war but one that is ultimately worth fighting

• Just because you get on top of a SERP doesn’t mean you’re going to stay there. If you do something that really pisses off the search engine from whom you’ve worked so hard to earn respect, at a moments notice it can all disappear. If you ever get to the point where your SEO is so valuable that you need to protect it, it might be worth looking into hiring an SEO company to lend a hand.

• It’s hard to find a company that actually knows what they are doing, and all of the companies that you know are going to do a good job for you will make you pay out the nose at huge premiums. That said, no risk no reward. The best route is to meet with boutique SEO companies, and just evaluate the people your speaking to – have they produced results before, did those results generate more business, does the person managing my account seem like one of those really brainy people who loves their job — this is pretty crucial, only SEOs who love optimizing are truly great at getting results, as I believe is the case in any profession.

SEM Strategy & Spend Considerations

More marketing dollars go into SEM than any other lead-generation activity on the planet. Check out other WeSpotlight blogs if you want quoted facts on this, but trust me, there’s something to SEM. Search engine marketing is probably the most effective way for companies offering commodity products and services as their main offering (think retailers offering big brand products, extermination services, home appraisals, etc.). However, SEM can be of course be a great way to market for companies beyond the scope of commodity offerings as well – let’s take a look at the benefits:

1. Spend on SEM can be very data-driven, formulaic, and produce predictable results. This can provide a very statistical and hard-science based approach to developing and implementing good SEM strategy. In the dichotomy of SEO vs SEM, SEO is most definitely art while SEM is strictly science. For that reason, optimizing an SEM campaign can be far easier than optimizing an SEO campaign

2. Results are immediate. No matter what budget you might provide to Google or another search engine, you can pretty much be certain that you’ll be able to spend all of it every day if you wanted to. Because results are so immediate, there is a constant stream of data that allows one to find ways to make the spend more effective – targeting different audience, different keywords, promoting higher converting products/services or pages, finding weaker/stronger parts of the website, etc.

3. Almost everything is automated after the campaign is set. The only real ‘work’ that goes into SEM is optimizing the campaigns as discussed before. I’d venture that greater than 50% of people who run campaign set it and forget it, never to be touched again or evaluate data. This leaves a bunch of room for the more competitive bunch to find keyword niches and such.

4. Doesn’t require much technical knowledge, although you will likely need the assistance of an agency if you are serious about getting a nice margin

5. SEM can be written off as a business expense, whereas SEO (if you’re doing it on your own) is time spent, not money.

Some Drawbacks of Investing in SEM to Consider

• All benefits of SEM are inherently short-term in nature

• Margins have been squeezed, especially for companies that don’t offer a good website experience. Quality Score as defined by Google can be the single biggest determining factor in whether or not your SEM efforts are ultimately profitable. I strongly recommend anyone reading this blog who is considering making a significant investment in any search engine marketing or advertising to comb through the details of how Quality Score is calculated/determined.

• Paid traffic is known to convert at a much lower rate than SEO.

• Sometimes your competition will click on your PPC ads just to run your budget up. This is a known cost of doing business for the most competitive keywords out there, like e-commerce website design. I don’t even run ads anymore because WeSpotlight’s SEO is off the charts! Granted it took about 2-3 years of constant SEO work to get to that point.

To wrap up, SEO and SEM are both important, and try not to think of one being better than the other. Most companies should be investing in both. The most important thing to understand here is which will be more effective for you company, and how to align a decision in marketing vehicle that is aligned with your business goals. Search engine optimization is more about the long-term vision of your company becoming a top player in the space, whether locally or nationally. Search engine marketing on the other hand is a sure fire way to drive traffic to your website immediately, and increase the probability of generating sales/leads.