THE ANATOMY OF CHEAP SEO.

SEO INSIGHTS

A closer look into pricing for SEO.

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INTRODUCTION

At SustSeo we regularly get calls about search engine optimization (SEO) that should be “cheap” or that at least stay “within reason” when it comes to pricing—in other words, a good deal of people out there like their SEO cheap, and cheap only.

In this article we will have a closer look at what cheap really means in regard to SEO. We will shine some light on why the price level of SEO appears to so many as too high and where this misconception comes from. Because that is what it is, a misconception.

A first caveat about buying cheap SEO comes from none other than Google itself. We look a little under the surface and explain that cheap SEO does not go well with Google’s business model. We then lay out that cheap SEO plans as such are very likely to not only show meager results, but that they may also be outright harmful to a website.

If cheap SEO does not serve the interest of business owners, then we need to discuss alternatives. We bring in a recent case study and compare the efficiency of Pay-Per-Click (PPC) traffic against SEO—with surprising results.

Where The Idea of Cheap SEO Comes From

Now, the people making these inquiries, many of them small business owners, are definitely willing to spend money. Yet for them, and even for larger businesses, SEO is still considered simple advertising. It is treated as a unwanted must-have as if it was buying ads in a print magazine.

With that comes the usual comparison of prices. As humans we like to make decisions as a choice in between alternatives. In the end we go with the offer that has the best value-for-money.

Technically, all of that is not different from other buying decisions. In any supermarket the cheapest yogurt always is in the bottom shelf while the over-priced brand names are right in front of you. And most likely both products come from the same manufacturer anyway. 

We reach for the low-hanging fruit and get a good deal. How could SEO be any different?

Cheap SEO Only Exists in Theory

Reality, though, is different. What most buyers of optimization services tend to forget is the extreme thrust behind SEO. Here is a real-life example that sets SEO apart from buying print ads and the likes.

We regularly gets inquiries from mid-sized businesses that provide a local service or sell their product locally. Most of the time these companies already rank for their desired locally-themed keyword (“best Japanese restaurant in x”).

Their problem usually is that they are (a) stuck on page two of the result pages or (b) that they have broken into page one but cannot break into the top three. Much to their dismay they remain on spots 4-10 where they receive a maximum of 7% of all traffic. At the same time the competitor ranking at one collects 33%, i.e. one third of all traffic:

Cheap SEO packages: Why does SEO cost what it costs?

IMAGE: With a 50% drop down to 17% number two still sees a somewhat reasonable Click-Through-Rate (CTR). Once it is spot #4 it is all downhill. The CTR will remain below the 7% mark and will never rise above it. Spot #10 only sees 2.5% of traffic, spots 15+ do not receive any noteworthy traffic at all. (Source: Chitika).

… Then something interesting happens. All companies outside of the top three will pick up the phone and call up an SEO agency. On the phone they will say that they “urgently” need to spike up their ranking because “nobody ever clicks on us.” And that even though “we already are on page one!”

For the simple reason that sooner or later everyone realizes that ranking outside the top three is pretty much worthless (the traffic coming from related long-tail queries put aside for a moment), this process happens simultaneously seven times and to seven different SEO agencies by all seven competitors ranking 4-10.

For us as an SEO agency this means the following: not only do we have to optimize the client’s site itself, an act that can be an uphill battle if competition has been around forever while our client is the new kid on the block. We also have to work against the constant effort of seven other agencies.

When we eventually get the client to rank #1 we have not only optimized his site in a way that world give him a foot in the door with other topically related keywords (holistic SEO). We have also destroyed the work of seven other SEO agencies. These, too, were in the trenches for their client looking to rank them for the same keyword as we did.

Ready for a real-life comparison? In real life an attorney would have to convince judge and jury and he will argue only against one opposing counsel. In SEO judge and jury won’t even tell what laws they follow and any SEO agency will face at least nine opposing attorneys constantly arguing against them.

Cheap, non-sustainable SEO arrangements make sense in absolute theory only. In practice, SEO has nothing to do with real-life buying decisions. It is a class of its own whose power is well-above regular marketing.

The Extreme Power Behind SEO

This is why SEO is such a powerful marketing tool. It is powerful because by hiring an SEO agency a client is not looking for a quick fix. He is looking to fully dominate his keyword. And as we have seen from the chart above he has to do that if he wants to see any reasonable traffic at all. There are niches in business as such. There are no niches in search engine optimization. Here, it is “hit spot number one” or end up with nothing. Cut-throat.

Hiring an SEO agency therefore not only means optimizing the client’s website, it also implies knocking out his entire competition. Because that is what happens when a client goes #1 and gets 33% of the cake while the others get to settle with scraps.

In a real life scenario where restaurants would compete over walk-in customers this would not even be possible. How would you establish a the winner takes it all-principle in a local restaurant scene so that one restaurant gets 33% of all customers while the rest essentially gets nothing? By building brick walls around their entrance doors? Impossible, we’d like to think. With SEO, however, establishing such a principle is very much possible. In fact, it is the rule.

In regard to SEO deals this means the following: Anyone who is capable of providing such a powerful service does so on the grounds of year-long experience. He is aware of its value and will not undersell it. Either that or he is simply misrepresenting the truth and could not get his client to rank #1 in the first place (no pun intended). Or have you ever seen a stock broker who brings clients 33% in growth and who is then offering his service for a monthly plan of $199 or even $99? I know I haven’t.

In sum, it would be wrong to frown upon whatever price a knowledgeable SEO agency charges. This is because the goods delivered provide excellent value-for-money: they bring a positive ROI which is the only thing that matters. And probably nowhere else is price as much of an indicator of quality as in SEO.

Google Does Not Like Cheap SEO

The biggest advocate against cheap SEO plans is Google itself. The sole aim Google follows with the way they deliver search results is to mimic reality. In that they were first successful in 1999 when they established the idea of social proof (“backlinks”) as a key ranking factor.

For Google, search results should reflect reality before anything else. Hence the fact that besides backlinks lots of commentary in social media, i.e. real people discussing a website, can act like quasi-backlinks and can push rankings tremendously. (Yes, Google can part positive from negative commentary. even though it does not necessarily qualify negative commentary as “bad”).

Everything they do is about making their results as ‘organic’ as possible as opposed to ‘mechanic’, meaning based on the isolated math of an algorithm.

Google, similar to Facebook, also maintains an entire shadow army of content raters, so called Search Quality Evaluators. These are real life people who judge websites upon their (the rater’s) personal and subjective impression (“user experience”).

Based on that they will up-vote or down-vote a website, if they are of the view that a site does/doesn’t provide a helpful response to a search query (the official guideline that evaluators operate on can be found here).

To fully understand that going for a ‘cheap’ SEO option is never a good idea all you need to do is compare the hourly rate of someone working in search engine optimization against the thousands of $199, $99 or even $49/month SEO plans out there.

The worldwide average hourly rate of an SEO consultant is $149 (source: GetCredo). Now ask yourself how much time someone will devote to your website if the monthly retainer you pay for your package is below the average rate of a single hour.

What the “cheap” marketer (pun intended) will do is automate and outsource the process. The latter is even more risky for the client as the ones he outsources the work to will receive even less than him and by that are even more likely to use spam tactics instead of providing sustainable SEO.

IMAGE: SEO for a monthly price of just $49. Ten hours of work are being promised which is an hourly rate of $4.90. It would be hard to compel someone to do manual labor for $4.90 an hour. What quality of work can you expect when somebody claims to push your revenue for less than minimum wage?

… In any case, nothing he will do is going to be organic. He simply could not invest the time, given how little he earns from a client. By automatizing SEO (low-level backlinks, thin content etc) he does the exact opposite of what Google’s business model stands for.

Most obviously, this will lead to heavy problems. Be that when Google rolls out an update aiming precisely at cheap SEO efforts (done in 2005, 2007 and 2010), by a manual penalty or simply by an unfavorable rating from an evaluator.

Yet these problems are not faced by the marketer. They are faced solely by you, the client. It is the client’s business that loses traffic, leads and sales while the marketer will easily move on. Cheap SEO therefore is anything but harmless. It poses an actual risk to your business

Cheap SEO is a Myth

We can now say that the terms of “cheap” and “affordable” in regard to SEO are absolutely relative.

What may appear “high” becomes very affordable when compared against the gain in revenue that comes in once a number one position has been reached. Professionally executed SEO always is a gain, never a loss. When asked about how much good SEO costs a wise man once said:

With SEO you pay first, but you receive later. And what you receive will stand above of what you have spent. Good SEO essentially is for free.

— Unknown Search Engine Optimizer

Around January, 2014

Be advised that at the same time the rule of “You get what you pay for” applies universally and that it can be brutal when applied to SEO. Here is why:

Google content evaluators are paid $13 per hour (12.51€) and they work remotely exclusively. They are employed as native speakers of any major language and face a stiff workload when judging content based on the content evaluation guidelines.

Therefore, the average time a Google content rater will spend on your website to assess whether or not it’s a good fit to the search query is about 10-15 seconds. To say it more direct: you will be rated upon your website’s first impression, its look and perhaps the first paragraph of your copy.

What will happen if the first impression you give is one of over-optimization? Or even one of outright spam, thanks to the cheap SEO package you bought? In other words: Do you want to risk losing your entire business through a Julius Caesar-like hand-gesture for sub-par SEO work that looks like it came straight out of 2004?

Emporer Nero giving a thumbs down for Cheap SEO (and probablz for a gladiator inside the Ancient Roman Circus Maximus).

IMAGE: Google actually says that Search Evaluators (raters) do not directly decide what content will be evaluated. They say that the evaluators’ decisions will be assessed, operationalized and then implemented into the algorithm. However, given the huge amount of content to assess and the fact that bad content needs to go immediately (nobody is buying Google Ads that are displayed in proximity to bad or harmful organic results), the statement is to be taken with a grain of salt. In any event, it does not make any difference: having  SEO done in a cheap and unsustainable way will have you face the risk of getting penalized. Be that manually or trough an algorithm

ARTICLE CONTINUES: Experience shows that this is precisely the level of quality provided by those selling cheap SEO packages. And given the little money that they make from a client it is anything but a surprise.

Google is well within its rights when they make use of a flesh-and-blood ranking mechanism: No one is better at recognizing automated SEO work, i.e. spam according to the Google Webmaster Guidelines, than the trained human eye.

Pay-Per-Click as an Alternative to SEO?

The biggest difference between SEO and PPC is that they have nothing in common. SEO is the optimization of websites so that organic traffic is gained free of charge and in a long-term approach. PPC is paid traffic. Once the budget for PPC comes to an end traffic comes to an end.

Not so with SEO. Here, the goal is to not pay for traffic. Rather, traffic is gained through a well thought-out strategy that will provide for traffic even if SEO work outside of ranking-maintenance is no longer applied. Rankings earned in a no-spam approach have a long half-life. Trust and even seniority are strong ranking factors with Google.

PPC has the upper hand when:

(1) Traffic is needed fast.

As trust and seniority take time to develop a Google Ads campaign (previously: Google AdWords) will deliver targeted traffic within a short amount of time. In order to convert to sales and leads the website only requires optimization in regard to its conversion rate.

PPC is of no use when:

(2) The profit margin of the good or service provided is too low to justify the PPC price.

What exactly does that mean? Here is a case study  (small business) that puts SEO and PPC into perspective.

Case Study: Anna's Jewelry Store

ANNA'S JEWELRY STORE

The business: Anna, owner of a brandnew jewelry store in Illinois, USA, sells hand-crafted bracelets online for the average price of $60.

The product: To assemble one bracelet she has to buy material for $30. It takes her about 15 minutes to create a bracelet. For that she will add her own labor cost of $15 to the expenses (her hourly rate is $60). This leads to a profit margin of 25% or $15 for every bracelet she sells.

Buying PPC: Let us now compare the profit margin against the expenses Anna faces when she is buying PPC traffic from an ad network like Google Ads (formerly Google AdWords).

Evaluating PCC: From previous tracking Anna knows that her online store has a conversion rate of 3,5%. This means that out of one hundred genuine visitors three and a half will make a purchase. One hundred visitors therefore lead to $52.50 in revenue ($15 x 3.5).

We are now looking up the price for a click for users inside the United States that have searched for the relevant phrase “amber bracelets”. Google Ads shows us the following price:

Google Ads reveals the following: If Anna wanted to buy one click from users looking for “amber bracelets” online she would pay an average price of $ 0.95. 

This means that buying the traffic to receive $52.50 in revenue, i.e. one hundred clicks, will cost her $95.

By that the jewelry store could not survive on PPC. Given the high prices for targeted PPC traffic, PPC requires a relatively high profit margin in order to be profitable and vice versa: a low profit margin is no problem if click prices are low.

In our case Anna would have to spend $95 to receive $52.50 in revenue. As other related search phrases show a similar PPC price buying traffic from Google would make her lose money, and not make any.

The relationship between PPC price and profit margin also is the reason why attorneys can afford to pay $20 or more per click. For an attorney whose minimum retainer fee is $5,000 and whose conversion rate is 1%  spending the necessary amount to see one conversion (100 visitors for the price of $20 x 100 = $2,000) still is an excellent deal: pay $2,000 and get $5,000 in return.

SEO vs. PPC: Anna’s jewelry store would benefit more from a sustainable SEO strategy than from PPC. With a monthly SEO plan for $1,750 her organic traffic could be grown to about 3,700 visitors/month in about a five months time-frame – these are average results for an online shop.

The store would then generate $1942.50 per month in revenue from month number five onwards. Five months of SEO would come down to $8,750 in expenses. $8750 divided by $1,942.50 is a little more than four.

Conclusion: For Anna this means it would take about five months to have the SEO expenses amortized. Consequently, about five months after launching her store Anna would run a profitable business bringing in almost $2,000 per month in a self-sustainable way, without the need to buy traffic at all.

As all growth had been gained in a sustainable way which includes a strict no-spam approach, Anna is at no risk to lose rankings, and by that: revenue, due to a manual penalty or a Google algorithm change.

Final Thoughts

The idea of a cheap SEO package is no less than a contradiction in itself. We have seen from simple calculation that is impossible to provide quality SEO work for a price so “cheap” it doesn’t even reach the average SEO consultant’s hourly rate.

Moreover, it is the one search engine with a quasi-monopoly for search queries in the English language,
i.e. Google, that hates cheap SEO (and all unfavorable methods that come along with it) with a vengeance. By subscribing to an SEO plan “on the cheap” business owners are actively putting their business at risk.

We have also seen that sustainable SEO, this means a SEO strategy that features:

  •  A long-term view on things,
  • Spam-free work ethics that serve to protect you from future setbacks and:
  • A positive ROI

is by no means unaffordable.

To the contrary, the only “burden” imposed by sustainable SEO is a delay of gratification.

At the same time the delay comes with a quasi-insurance from future penalties by search engines or a loss of ranking. Therefore, if we ask ourselves again: “What is the real price of SEO?” the answer should be clear.

As a wise man once said:

Good SEO essentially is for free

Quick Summary // Takeaways:

  • Cheap SEO packages sound good in theory, but fail in practice.
  • SEO is more powerful than print ads for businesses.
  • Cheap SEO deals will in high likelihood involve spam tactics.
  • Spam exposes you to the risk of a penalty by Google.
  • Case Study: Sustainable SEO beats PPC cost-wise.
  • Case Study: Choice between sustainable SEO and PPC campaigns depends on profit margin.

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