Let’s talk numbers – specifically how much money you should be allocating to an SEO budget for the year. I’m not here to give you actual figures. It really does depend on your business. Having me tell you that should cost £3000/month is useless and you’ll see why soon enough.
The lesson is that there's no 'right' way to set a budget. There's a lot of factors to weigh up but here's some of the things you may want to consider when deciding what your SEO budget should be to ensure healthy year on year growth.
This post is ideal if you're at the point where you or your boss have already decided on your revenue goals (or business goals) for the year ahead. If you know you need to increase revenue by 5% then here is where you can learn how to work out how SEO can contribute.
Once you know your goal here's the 3 different areas I would want to draw information from which will factor into your budget plans:
First, by taking a look at your historic performance - and really digging into the value of organic
Second, by factoring in what changes are happening internally in the next year
Third, by understanding what changes are happening externally that will affect the price you pay
Your Historic Performance
Let’s start with what we already know, what’s happened in the last 12 months. For this you’re going to need access to your analytics - with conversion tracking set up.
Using your conversion data we can understand your organic performance. This should give you a decent benchmark for how effective SEO is (or isn’t) based on its current level of investment. This also allows you to compare the investment to the other marketing channels that deliver business.
But what should you be measuring? The answer is never just organic traffic figures.
Investment into SEO should always be measured against business outcomes. Depending on what type of website you have these are the items I tend to look for:
Measuring organic performance of E-commerce websites
Almost always I would be looking at revenue generated from organic. This is an easy figure to obtain from analytics if E-commerce tracking is correctly set up.
However, there's added nuance you can add to really understand how organic might be doing. I would also be looking at:
What are the other channels that are a part of a users journey towards an organic purchase? It’s highly likely other marketing - online and offline would be sending people to you with Google only the last in a series of touchpoints. How much do you invest in those? Check your user journeys
What is the return rate on products? It’s great organic delivered a sale but does the channel offer a higher or lower return rate on products compared to your average?
What is the split between branded and non-branded traffic that’s converting organically? If there is a high percentage of branded organic traffic then this might skew the result of the quantity (and quality) of organic led transactions
Measuring organic performance for Lead Generating websites
I would typically be looking at the quality of leads. However, I'm also mindful that:
Quantity of ‘leads’ can mean very little. Conversion figures in GA4 won’t account for spam messages, trade enquiries, press releases and so on
Focussing on the quality of lead just after enquiry is sometimes better. I tend to look at whether the enquiry is good fit, has a decent budget etc,) instead of if the enquiry has turned into a confirmed sale. The SEOs role is lead generation, not sales, so if a business loses the customer through other reasons, such as a dodgy sales process, we may not want to include those in our budget decisions
There's a lifetime value of a customer. If PPC lead generates a 1x£5,000 sale and an organic SEO lead generated 1x £1,500, sale side by side the PPC lead ‘wins’. However. if that £1,500 sale happens every month for 12 months and does so for the next 6 years then the face value numbers can be deceptive
Measuring organic performance for Informational/Awareness Websites
You might have a website that wants to raise awareness of a particular cause. Or a public sector website for people to find accurate information. Here, I would be studying your Events data to see the impact SEO has had.
Sometimes this can be traffic metrics like pageviews and sessions. Other times this can be specific actions such as clicks, downloads or registering for a mailing list. Digging deeper you can refine the quality of your data by:
Filtering out visits by geography. If people are finding your content via Google they could be arriving from anywhere and so may not be relevant if you're only serving one specific country or territory. If this is the case then set up and apply a filter to only measure the Events from only the people which matter to you
Scrutinise your search terms. Your data in Google Search Console will show you many of the search terms which people are using to find your website. Not everything people search for will be relevant to your cause. I once worked on a website which ranked really well for an image of a garlic crusher. It made our page view metrics look fantastic bringing in around 30% of all pageviews. We didn't sell garlic crushers though. Turns out people just wanted the image to use elsewhere. If you can locate something similar it's wise to remove this from your figures
Combine your Events - by placing two or more Events into a Conversion you can bring to the front visits which were of a higher quality Events than others. Say someone spent more than 2 mins on a page (Event 1) and clicked to download a PDF (Event 2). You may find that Organic traffic does a better or worse job of generating multiple combined Events than other channels.
Internal changes that affect SEO budgets
What’s we’ve looked at already is thinking about SEO budgets if things are all good and steady and you’re simply looking for a progressive year on year increase in revenue or leads.
But that doesn’t account for changes on the horizon. The known unknowns that could upend your budget decisions.
The lesson here is that changes to a business should always be reflected in changes to your SEO budgets.
Over the years I’ve worked with multiple clients that have seen a major change to the way they do business. Some of the things I've been involved with include:
Undertaking a complete rebrand
Building a new website
Merging multiple websites into a single website
Separating out a single website into multiple websites
Launching a product or service internationally
Moving into a complete different business vertical
All of these have been thoroughly interesting projects to work on but substantially affect the work I’ve been implementing. Simply put, any of these types of actions – actions which mean a major shift in business direction – will mean more budget is needed.
How much money? Well, that depends. It depends on the scope, the complexity, the timelines and all the other elements which a good project brief could start to answer.
The pitfall is that many brands anticipate that an existing budget is somehow going to include everything you’re already doing and also stretch to accommodate these changes. Don't be this person. Speak to an SEO consultant to at least earmark what extra budget is needed. And that’s just for getting it done. You also need to think what happens as a result.
The consequences of internal changes to your SEO budget
The line ‘SEO is an investment, not a cost’ is a used a lot – but it’s true. And that investment is going to take time to yield results. We could be talking months, sometimes longer, depending on the size of the changes implemented before Google sees and hopefully rewards you for your efforts. And that’s if everything goes well.
Scoping out a best, expected and worse case scenario for a major business change should be part of your SEOs remit. This isn’t the post to get into specifics for how to do this but the likelihood is that there will be shortfall in the SEO performance of your site while changes start to take affect.
Bringing this back to budgets means one of two things:
First, you may want to look at earmarking additional SEO investment in the short term to get things back to, and then beyond, were they were
Second, you’ll may want to look at allocating budget to other digital marketing tactics in the short term to mitigate any negative impact felt by major website changes
Fail to plan, plan to fail and all that. Then we move onto the external factors:
External changes that affect SEO budgets
We then move into the final piece of the puzzle for working out your SEO budget. Here is what you’ll know so far:
Where you’d like to be
Where you currently are
What major changes are on the horizon
The question then becomes how much will it cost to hire the resource to get you to where you want to be?
Step 1: Identify your needs
To deliver SEO services a bunch of different skills and tools are deployed. What they are and to what extent they’re used differ for every brand. Rarely would a business just need generic SEO services. Instead, an established website would need more or one thing and less of another and each specialist service commands a different price tag.
So speak with whoever is working on your SEO already (or hire someone like myself) and they can give you a shopping list of what needs to happen.
Step 2: Decide who to hire
Let’s say from speaking with the experts you’ve worked out that it’s content marketing which holds the most promise to achieve your SEO goals.
To ‘buy’ content marketing you have 3 options – hire an agency, hire a freelancer/consultant or recruit someone to work in house.
Tying to work out which of these options you might go for is a challenge. Trying to find someone in the option you’ve picked is an even bigger challenge.
Across agencies, freelancers and in-house employees each will have a financial price tag attached. Plus, there’s also the questions over their availability, actual skills, communication skills to consider when making this decision of who to hire. Generally speaking, across all 3 categories of agencies, freelancers and employees you’ll find people who tend to specialise in one of these things:
Link building
PR
Events (online and offline)
Onsite SEO
UX
Content Marketing
Local SEO
Technical SEO
International SEO
Web Development
But each of these has a different price attached. Not sure what each of these tactics are? Then my guide on SEO for luxury brands will help.
Step 3: Budget for extra resource
Let’s say you hire a content marketing agency. They’re ace, they start delivering some good quality work. Then comes the extras.
The extras are all the other items which can really make your content flourish and are much needed when it comes to looking at SEO holistically across a website. These can include:
Design: Creating graphics, illustrations or videos to support your content
UX: Editing the page design to improve readability and user experience
Web Development: Upgrading the site code to load the content more quickly and efficiently
All 3 of these could be additional line items on your budget sheet. Sometimes they may be included as part of wider work on the website. But often they’re not. This can potentially mean repeating the whole hiring an agency/freelancer/hiring process once again in order to support these items but they should be treated as an additional cost to include in your final budget.
Let's bring this altogether...
An example of setting an SEO budget for an E-commerce store
Let's imaging we're the marketing manager for an E-commerce store. After an initial SEO audit, you've prioritised the findings and and decided on having 2 people in place for the day to day management of the SEO.
There's 1 marketing assistant we hired and has 50% of their time to update the website and carry out basic optimisations
There's also 1 Freelancer Content Writer supplies the brand with content each month
The financials:
The website generates £750k in revenue each year with £142.5k of that coming via Organic
Last year's investment in SEO was £24k - £14k for the marketing assistant's time, £10k for the Freelance Content Writer
Our boss wants to increase revenue by 15% meaning another £112.5k to bring total annual revenue to £862.5k
The question: how does our SEO budget need to change?
To start things off we look into our conversion data and see how organic is performing, but more importantly how it is performing in comparison to other channels. For this example, it's just a comparison between organic and Paid Search + Display.
Up front Paid Search + Display look like the standout winner generating the largest share of revenue. However, when we include the costs of investment into the channel the Return on Average Spend (ROAS) is lower than the investment in SEO.
Channel | Revenue | Revenue % | Investment | ROAS |
Direct | £150,000 | 20% | | |
Organic Search | £142,500 | 19% | £24,000 | £5.93 |
Paid Search + Display | £247,500 | 33% | £48,000 | £4.53 |
Referral | £67,500 | 9% | | |
Social | £90,000 | 13% | | |
£52,500 | 7% | | | |
Total: | £750,000 | 100% | | |
You obviously want to collate the costs of the other channels too for a wider comparison but looking at the financial implications of your SEO like this can make it easier to work out what channels are working better than others.
You don't need to do anything with this information, yet, but if you know you may not have a great deal more budget available it can start highlighting which channels are working more effectively to move budget from one tactic to another.
Next up, the internal changes. Your boss has already said there's a website refresh on the horizon. You can worry about the specifics later but that could have a potentially significant impact on the site's performance. Better budget for that too.
Bringing everything together, there's also the external changes to consider.
While you're regularly adding content to the website, you're aware that the website isn't particularly fast and as the SEO audit was completed a couple of years ago, are unsure whether more could be done. You find a SEO consultant to undertake an updated audit. If your suspicions are confirmed, that there's a technical SEO job which may need to be factored in.
You start shopping around for speculative quotes and find an agency who are able to price up a 1-off optimisation job to highlight several of the items highlighted in the audit. It isn't cheap though. However, you know that improving the site speed could help your SEO visibility as well as conversions for everyone on the website so it could be a worthwhile investment.
Finally, there's inflation to factor in which will each add 10% to the bills for your marketing assistant and freelance content writer.
So far you have...
Item Number | Item | Who is involved? | Price |
1 | Website Maintenance | Marketing Assistant | £15,400 |
2 | Content Writing | Freelance Content Writer | £11,000 |
3 | Website Refresh - SEO Planning | SEO Consultant | £2,000 |
4 | SEO Audit | SEO Consultant | £3,000 |
5 | Technical SEO Optimisations | SEO Agency | £6,000 |
| | Total: | £37,400 |
With all those things combined you have an SEO budget going from £24k in the past year to just under £38k - a 55% increase. Or to put it another way you need to win or find an additional £13.4k in budget.
This is where it's over to you. Can you move budget from other digital channels to accommodate this? Does your boss have additional budget they can unlock? (You might find this post on presenting an SEO audit to the board for some useful advice on how to persuade people of your arguments for this)
You know SEO is working for your brand, the question is whether the additional costs will generate enough of a return to help reach the additional £112.5k in revenue. You're never going to reach the a perfect outcome. But you've done the hard work to try and figure it out and put something sensible forward to keep the organic sales coming in.