92% of UK companies using SEO are being ripped off

In a Twitter survey of over 5,000 UK companies conducted by Surveys Online, 92% of businesses that use SEO believed they were wasting their money.

The survey questions were as follows:

1. Have you changed your SEO company more than once in the last three years?
2. Do you get accurate reports that show exactly what work has been done on your website?
3. Can you quantify the ROI on your SEO spending?
4. Since starting your SEO campaign, have you seen a real upturn in enquiries or sales?
5. Do you believe you’re getting value for money?
6. Has SEO cost you more than just money?
7. Do you think that part or all of your budget is being wasted?
8. What is your average SEO monthly cost? (Answers were between £, ££, £££)

(The survey gathered a 24.1% response rate, (1,114 responses))

The results were as follows

1. 79% of companies have changed their SEO company within 36 months
2. 21% were happy with the level of reporting
3. 90% could not calculate the return on investment on their SEO accurately
4. 31% had seen an upturn in sales or enquiries (69% had seen a downturn in traffic)
5. 92% believed that they were wasting most or all of their money
6. 44% had a horror story about how their old Digital Marketing company had caused so many problems
7. 64% believed they were overcharged or weren’t getting value for money (or that more could be done to give value).
8. The average SEO spend was £492.So what does this mean?

There are 5.6 million SMEs in the UK. The number of companies that actively pay for an SEO service is approximately 27%, according to research done by Yahoo, equating to about 150,000 UK businesses actively using the services of an SEO company or online service.

The UK SEO industry is accordingly worth approximately £74 million.

According to the survey, of that £74,000,000, 64% of it is either being wrongly spent or was a complete waste of money, meaning that UK businesses are being ripped off to the tune of £48 million every year.

How do you know if you’re one of those companies being ripped off?

All advertising and marketing, in a sense, is a risk. It is impossible to predict the outcome accurately.

The popularity of Google ads is that budgets can accurately be set in the number of clicks carefully red. At least, you are getting something for your money and can see an accurate cost of gaining new customers (CAC).

It is commonly agreed that SEO, adding content, and improving your website are better long-term strategies than simply throwing money at Google or Facebook ads. So, choose an SEO company!

• However, it isn’t always easy to see the difference between a risk and a scam when looking into search optimisation and choosing an agency.

Sometimes, customers and clients do not help themselves by asking for some ‘SEO’ without quantifying traffic, ranking and revenue goals. So they’re in danger of being handed some ‘SEO package’ of various qualities.

13 WARNING SIGNS: How to avoid being scammed

The first thing to look for is certain red flags.

When speaking to your SEO of choice:

1. Do they offer guarantees of a #1 position in Google?
2. Do they keep mentioning that spending money on Facebook or Google ads could be a viable alternative?
3. Do they fail to offer case studies, past Google ranking results or current customers you can talk to?
4. They talk about automating much of the work, but do they only talk about producing content for SEO?
5. Does it just sound too good to be true?
6. Are their search packages a one-size-fits-all?
7. Do they talk about keyword research more than what they will do with the data?
8. Is there no talk of strategy or a concise plan of action that has worked in the past?
9. Do they mention securing a large number of backlinks might be the answer?
10. Are they very hazy about who, if anyone, actually writes their content or how much work/hours they will deliver?
11. Are they simply too cheap? Is the amount they’re asking for considerably lower than the promised revenue returns?
12. Do they charge by the keyword?
13. Are they constantly throwing jargon at you? SEO, SEM, KPI, RIO, DA, SERPs, BOTS, 404s etc.

If you hear any of the above, choose a different provider. You are going to have problems.

So, how much should I pay to use a legitimate SEO company?

Prices are set in many ways.

Sometimes, you’ll end up paying more for a service because of the company you choose – this does not mean you are getting better value for money. Instead, it often means they have higher overheads.

• The larger the agency, the larger the costs.
• If they are based in central London, they will cost more.
• They have a sales team, or if they actively sell and advertise, their prices will be higher.

Instead of getting proposals and comparing quotes, determining what SEO is worth to your business is often a better pricing mechanism.

Several old business formulas tell you that you must spend 11% of your revenue on marketing/advertising if you are a new business. You can reduce this figure to 4-6% if you’re an established business. Over the years these figures go up and down but give an idea of what you should spend. Remember that the SEO cost is only a part of this calculation.

• Revenue: £350,000 pa, total marketing spend £14,000 to £35,000.

Using a different method

Another way of working out the value of SEO to your business is the value of a sale or a new client. (One assumes that if you rank number one for all your keywords, you will receive more traffic and, hence, more sales). That being the case, what would your estimate be of the increase in the number of items sold or new clients attained? I appreciate that there is a degree of guesstimation. However, you can quickly come to a figure.

You run an accountancy practice.

1. Example: £600 revenue from each new customer

SEO Cost: £12,000 pa

• If you rank #1 for ‘Accountant London’, you would receive traffic of 2,100 additional users to your website (source Google).
• Using a conversion rate of 2.35%, you would receive 50 enquiries a month.
• You would have approximately six new customers monthly using a standard salesperson conversion rate of 10-15%.
• If each customer pays £600 pa and the gross profit is 50%, then revenue is £3600, and gross profit is £1800.

So, how much of your gross profit will you spend on SEO?

• To work out the Customer Acquisition Cost (CAC), you divide the cost of SEO (£12,000 pa) by the number of new customers, in this case, 72. The cost of acquiring each new customer is £166.
• Each client gives you £300 gross profit but costs £166 to acquire.
• Affordable CAC is 3:1. i.e. the gross profit of a customer is three times the cost of acquiring it (in this case, £500)

Other factors to consider include how often a customer purchases, the customer’s lifespan, etc.

Additional long terms SEO value

There are also additional benefits from having more content or more backlinks. They are there next month and have value outside that month’s SEO spend. What I mean by that is that they will generate more sales in the future, even if you were to turn off your SEO today.

2. Example £1800 revenue from each new customer

SEO Cost: £18,000 pa

• If you rank #1 for ‘Accountant London’, you would receive traffic of 2,100 additional users to your website (source Google).
• Using a conversion rate of 2.35%, you would receive 50 enquiries a month.
• You would have approximately six new customers monthly using a standard salesperson conversion rate of 10-15%.
• If each customer pays £1800 pa and the gross profit is 50%, then revenue is £10,800, and gross profit is £5400.

CAC

• To work out the Customer Acquisition Cost (CAC), you divide the cost of SEO (£18,000 pa) by the number of new customers, in this case, 72. The cost of acquiring each new customer is £250.
• Each client gives you a £900 gross profit but costs £250 to acquire.
• Affordable CAC is 3:1. i.e. the gross profit of a customer is three times the cost of acquiring it (in this case, £750)

The higher value service/product spend often allows for a larger SEO budget.

The going cost of SEO

If you search Google for the cost of SEO in the UK, you will see a range of prices from £149 to £9000 PCM. This is what some sites think you should be paying. However, this is the surest way to be ripped off. Just because the market will bear prices like this and other companies are paying something similar does not mean it represents value for money. See our 6-month package for dentists.

As with any poor service, SEO that does not deliver conversion traffic wastes money.

To work out how much you should be paying for SEO is to

• Calculate what you are prepared to pay for a new customer (or sale)
• Value the associated benefits of building a faster/larger website and what that means to your business
• Value the promotional value of your brand by getting more exposure (web traffic)

I think that the figure will surprise you

A simple way to calculate SEO costs

A simple way to determine what SEO is worth to your business is to look at the potential traffic a keyword is worth and then set your conversion rate against it. Google Keyword Planner is an excellent place to begin (free), or we use Ahrefs. Both will give you a rough idea of traffic.

Take the traffic for several keywords and multiply it by your conversion rate (or choose 2%). This will give you the rough number of enquiries or sales that you could expect.

Working out the profit margins for your services or goods gives you an idea of what you could spend to gain that sale. Multiple this figure by the monthly sales you want, and there is your SEO spend.

Example

• Traffic for all rubber roofing products 19,000 PCM if the site ranks #1 for all keywords and phrases
• Number of sales at £40 (19,000*0.02% = 380 units)
• Sales revenue £15,200, (gross profit 50%, i.e 380 units *£20 = £7600)

How much of the £20 profit am I prepared to pay for the sale? 25%? This would give me an SEO budget of 380 * £5 = £1900 PCM.

Summing up

Although the SEO industry is known for its number of sharks and charlatans, and the blame for poor service falls on them, there is also a responsibility of the UK businesses to do their homework and work out what SEO is worth to them and use those calculations to determine what price they should be paying monthly.

If you want more help working out your SEO ROI, please telephone and ask to speak to Mr Sykes. He is the best person to talk to.