Paid Advertising vs Search Engine Optimization

Last week we were speaking with a local business owner as he decided on his marketing budget.

His local business is new in this area and he asked me where he should allocate more of his resources, “Digital Paid Advertising or Search Engine Optimization”?

This is a question we get asked constantly, which leads us to believe that one very important piece of information is not understood by most business owners.

The lower a business ranks on search engine results pages the more money that business needs to allocate to paid advertising and conversely, the higher a business ranks on search engine result pages the less money it needs to spend on paid advertising.

Why is this?

When a business is just starting out, it is IMPOSSIBLE for that business to be on page 1 of search engine result pages, unless they are the only business in the entire world offering that service.

Businesses that have been doing it for longer and who have invested more time and money into search engine optimization will always show up before the new business just starting out.

There is no way around this.

And since 93% of all internet users will never go past page 1 of search results, a new business has a very, very hard time getting seen on the internet.

Most search engines understood this and they came up with paid advertising. When a company pays for digital advertising on a platform they can show up at the top of search engine result pages.

Thus, businesses that do not rank high on search engine result pages can still get business, they just have to pay for it.

How does a small business take advantage of this information?

If you are just starting out as a business or if you have never done SEO for your business, that business should spend 75% of its budget on Paid Advertising and 25% of its budget on SEO.

Once the SEO starts gaining traffic and a business starts seeing decent results from it’s SEO, that business should change the budget to 50% Paid Ads and 50% SEO.

When a business has over 50% of its traffic coming from organic search, the business should change its budget again to 25% Paid Ads and 75% SEO.

This is the sweet spot for businesses. I would never recommend for a business to stop paid advertising all together, but I would suggest the 25/75 ratio.

Neither is more important than the other. Both are extremely rewarding in their own ways.