The Rising Cost of Digital Ads

  • Last Updated: 28 July 2018
  • by Charles Travers
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…and why it’s time to invest in SEO

The online marketing landscape is becoming more competitive with each passing day.

This is even more true if you’re relying solely on paid advertising for traffic…because the costs involved with running paid advertising campaigns seem to increase every few weeks.

In fact, PPC (Pay Per Click) advertising has become so expensive that you’re now probably looking for other options.

How Expensive Is Paid Advertising?

This isn’t just your imagination – online advertising costs have soared since 2005, and look set to continue their upward trend.

Average CPCs (Cost Per Click) in 2005, for example, were $0.38c.

average cost of ppc ads

Source: https://www.hochmanconsultants.com

By 2016 the average CPC had increased to $2.14!

average cost of ppc ads 2018

Source: https://www.hochmanconsultants.com

 

Even more shocking is that the cost-per-conversion in paid advertising has increased by almost 500% in a little over a decade.

The nature of paid advertising is that each platform starts out being very affordable. Then within a few years the CPC costs double and triple, forcing advertisers to move over to a new platform.

The harsh reality is that many small businesses are now finding themselves priced out of the paid advertising market, and have no idea what to do next.

We would suggest that your first step should be towards making search engine optimisation part of your overall marketing strategy.

online advertising

But…PPC Is Easy

Yes, it is.

You simply choose your keywords, create some ads and get instant traffic to your landing page.

In the good old days this speed of execution and delivery helped a lot of marketers get very wealthy almost overnight.

But the issue with PPC is that the results are transitory.

Once you switch off your ads/run out of money, then your traffic stops.

There’s no residual traffic, even if you’ve spent tens of thousands of dollars. Executing a PPC campaign is far more straightforward than learning the complexities of SEO…but with SEO you do get residual traffic.

So, the shift from PPC to SEO is of adopting a mindset of long-term growth as opposed to instant results.

But…SEO Is Dead!

You’ve probably heard this SEO myth from more “marketing experts” than you can shake a stick at.

We find this strange because both major brands and small businesses are investing increasing amounts of time and money in search engine optimisation.

The ironic thing about the “SEO is dead” myth is that the same people who spread it are the same people who sell digital ad training courses, tools and services.

It’s in their interest to whip you into a state of paralyzing fear, convincing you that you can only get results with paid advertising.

And then you find yourself taking the paid-advertising-only route…and you’re not even sure why.

SEO is most definitely evolving, but it’s nowhere close to being “dead”.

Anyone who tells you otherwise is trying to sell you something.

Why Companies Choose Paid Advertising First

One theory is that Google has made SEO increasingly more difficult to “nudge” businesses towards the relative ease of paying for their traffic instead.

Why would they do that?

Probably because Google earns an estimated US$95.4 billion per year from its AdWords PPC platform.

how much money makes from Google AdWords

Google AdWords revenue…in billions.

Google is doing everything in their power to push paid ads to the top of their search results, and it has nothing to do with providing you with the best answer to your question.

It’s motivated entirely by generating profit. And there’s nothing wrong with a company wanting to generate profit.

Just understand that they’re interested in their own prosperity, and not yours.

Omnipresent Branding

One of the key benefits of paid advertising is also its Achilles Heel – presence.

You can switch your online presence on and off at will, but you’re only ever “front of mind” with online shoppers when you’re running ads, for the right keywords and at the right time.

That’s an incredibly frustrating set of tasks for any business owner to mentally juggle.

Imagine instead if a system existed where you could build an online asset, and then have that same asset send free traffic to your business for years.

That’s what SEO is – placing yourself in front of your audience at all times, regardless of your cash flow or current business setup.

Or what we like to refer to as omnipresent branding.

Google Is A Verb

Before Google there were multiple search engines, such as AltaVista, Ask Jeeves, Yahoo and many others.

But no other search engine has become part of our lexicon in the way that Google has – it officially became a verb in the Oxford Dictionary in 2006.

Nobody talks about “Yahooing” something, but everyone knows to “Google” something when they need information.

Google is a perfect example of the “omnipresent branding” we mentioned just a little while back.

The simple fact is that people default to using Google organic search when they need to research or buy something.

Nobody ever sits there and thinks, “I wonder which of these paid ads is the most relevant to me?”

PPC advertising specialists have to deal the constant struggle around most people actively ignoring ads.

It’s only when somebody has exhausted the organic search results that they might consider clicking on a paid advert instead.

Google has conducted numerous eye-tracking studies to find the “hottest” real estate on a page of search results:

seo heatmap eye tracking

Source: TravelTripper.com

What they found each time is that web searchers pay attention to the information they find at the top of the page.

And that’s exactly why Google moved their paid ads from a sidebar to where they are now.

Your potential customers and clients expect to be able to Google you, and if they can’t then they’ll simply go and find somebody else instead.

People Hate Being Sold To

No matter how much you dress up the copy used in paid ads, the net result is the same – the ad is doing its best to sell the person something.

There’s something in each of us that hates being sold to, especially when it’s done in such an overt way.

In fact, this has lead to a new phenomenon called banner blindness.

People have become so accustomed to seeing paid adverts literally everywhere online that they subconsciously tune them out.

This is what happens in real life too, like the last time you impatiently skipped past yet another YouTube ad because you wanted to see the content instead.

Are you more likely to buy from a pushy salesperson that just won’t get out of your face?

Or will you wait for the salesperson who gave you some mental space, asked if you needed help, offered impartial advice, and then left you alone?

The answer to that question is the same every single time.

Search engine optimisation – content marketing being part of that process – is also about engaging people at an emotional level.

But there’s a different outcome, because you’re not trying to directly sell to your visitors, just like the friendly, passive salesperson mentioned above.

Instead you want to engage them with your content, to share it with their friends, and become a repeat visitor to your site.

There Are No Restrictions With SEO

Certain paid advertising platforms are becoming almost puritanical in their approach to what ads they’ll display.

Facebook, for example, is becoming increasingly difficult to advertise on.

We know of one example where an author of a weight loss book was prevented from running ads that displayed his six-pack.

Facebook was absolutely fine with displaying a picture of him when he was morbidly obese, but not one of him with his shredded body.

He never got a straight answer back on this, but they suggested it had to do with “nudity” and the potential for causing offense.

Yes, that really did happen.

The Internet is full of similar tales of woe, where people with popular products or services suddenly found their PPC platform of choice no longer wanted their money.

And it’s always because of some minor update to their TOS (Terms of Service) that now bans authors from showing their six-pack. Or because they no longer support your drop-shipping business model, etc.

In situations like this a small business can see their traffic and revenue streams dry up overnight

And it’s a very short journey from there to bankruptcy.

marketing relationship building

You Can Use SEO to Build Relationships

Paid advertising campaigns – those run by professionals – want people who click ads to do one of two things:

1. Buy/signup/subscribe/download

2. Go away

No business in their right mind pays for advertising for any other reason than to generate a specific result.

That’s the cold hard truth of PPC advertising.

So, the paid advertising mindset is very different to that of SEO – you actually want your visitors to stick around, read through your content and maybe even bookmark it.

Organic search is selling people on the value of your content.

You’re reaching out to help people.

You want to build a relationship with them.

Sure, you could build a great page of content and drive paid traffic to it, but if your content is already worth that cost then Google will invariably choose to rank it…free of charge.

As you build relationships with your visitors you’re also automatically building authority and loyalty.

You become the “go to” site on your particular subject for thousands of new searches each month.

The same effect is very difficult to reproduce with paid advertising.

Become Platform Independent

Putting all your eggs in one basket is an age-old proverb, a warning against investing all your effort into one area of your life.

seo means freedom

Yet we see businesses do this all the time – focus all their time and effort on one source of traffic, and from one specific paid advertising platform.

Allowing your business to become dependent on a single marketing or traffic platform is a terrible idea.

Ask any of the thousands of former Squidoo publishers who saw years of work wiped out with one single change to the site’s TOS.

You’ve never heard of Squidoo?

That’s exactly our point, yet at the time it was a platform that many content publishers relied on for 100% of their income.

What would you do in the morning if you woke up to find that paid advertising is now banned on all social media platforms because of some new EU law?

Or what if Google decided to ditch their AdWords program because of losses incurred by YouTube?

If your business is relying on one single source of traffic for your revenue then you are literally rolling the dice on the future of your business.

SEO isn’t a single platform – it’s far more organic than that.

Even if Google were to disappear in the morning, a replacement search engine would appear. Your business would still get traffic, just from a different source.

The Internet is now an indivisible part of our culture.

There is no scenario we can foresee where organic search simply ceases to exist.

You’re Creating An Asset

Building landing pages and driving paid traffic to them is a perfectly acceptable business model.

But how would those landing pages fair if paid traffic was removed or didn’t exist?

Would they rank well in Google, or disappear to page 20, never to be seen again?

Most landing pages would suffer the latter fate, simply because they were never designed with organic search traffic in mind.

seo is an asset

Source: https://www.mainstreetroi.com

Building a website that attracts lots of search engine traffic is a tangible asset. It’s something your business can benefit from for decades to come.

And if the day ever comes that you get tired of running your business, well you then have an asset you can sell for up to 37x its monthly net income.

Unmatched Return on Investment

Let’s assume you have a marketing budget of £5,000 to spend on digital advertising.

Based on current CPC statistics, that budget would buy you roughly 2,500 paid clicks.

If you spend your entire budget within 30 days (entirely possible, by the way), then you need to keep paying to play.

Investing that same £5,000 budget in organic SEO for your business can deliver the same number of visitors you got from PPC, but for several months, or even years.

SEO is simply more cost effective than paid advertising

Here’s an example of a real SEO expert generating 15,000 organic visitors in 30 days.

ryan stewart

Getting the same number of visitors via paid advertising could cost you anywhere up to $30,000…in 30 days.

And you’d have to do that month after month, whereas with SEO your costs can be a once off event.

Even if you did invest $30,000 in organic SEO, you will still get a better deal than with paid advertising.

Why?

Because SEO tends to have what are called compounding returns.

This is a fancy way of saying that in the first month you might get 2,000 new visitors. Then in month two you get 4,000 visitors. By month three you’re at 8,000 new visitors, and by month four you’re at 16,000 new visitors.

Paid advertising simply cannot compete with organic, white hat SEO in terms of return on investment.

As long as you’re following a sensible SEO roadmap you’ll see a growing return on your investment.

This is because any website that gains Google’s “trust” tends to enjoy a snowball effect in rankings and traffic, month after month.

There is some maintenance involved, but it’s minimal when compared to the potential nightmare of juggling a massively expensive PPC campaign.

conversion rate - cro

Conversion Rates: Organic Traffic vs. Paid Traffic

This is a debate that’s gone on for a long time, with no real consensus ever coming from it. But we know this is a question you’ve probably asked before, so we wanted to do our best to answer it.

The first thing to consider here is what gets clicked on the most on a page of search results – organic links or paid ads?

According to a study conducted by Moz, “…the first 5 results account for 67.60% of all the clicks and the results from 6 to 10 account for only 3.73%.”

Even more interesting is that only about 15% of the traffic that hits that page will click on a paid ad.

So, that’s a pretty clear result in terms of the gross percentages of clicks on each.

But now the question is…how well does that visitor convert to a sale or lead once they reach the destination page?

That’s where PPC has a slight advantage because the landing page is designed with one single purpose: get the visitor to take a specific action.

Regular pages of content are rarely created with that goal in mind.

But again, the numbers are what we care about here, and other studies have shown that organic traffic converts at around 19% and PPC traffic at about 9%.

That’s a pretty huge margin.

But, let’s take it down to an even more granular level – your cost per acquisition.

When you acquire customers solely through pay-per-click advertising that comes with a recurring cost. Customers acquired through organic SEO traffic have instead what is effectively a “once off” cost.

So, let’s assume that two different companies have £2,500 to invest in advertising.

Company #1 spends it on a PPC campaign, with a CPC of £1.

Company #2 invests £2,500 in an SEO campaign based on viral content marketing.

Source: Unbounce.com

 

Both companies acquire 500 new customers in their first month, so they both have the same cost per acquisition of £5 per customer.

However, the following month company #1 has to spend another £2,500 on their paid advertising, whereas company #2 acquires 500 new customers from their previous SEO efforts.

By this stage company #2 is now acquiring customers for £2.50 each. By the third month their cost per acquisition is now down to £1.25 per customer, and so on.

That’s a very rough example of why you need to look deeper than just the number of clicks, and conversion rates – because if you can reduce your cost per acquisition to almost zero, then your profits are going to skyrocket as a result.

You Don’t Need To Watch The Faucet

Forgetting about your paid advertising campaigns can be a very costly experience.

The reality is that unless you’re actively monitoring your paid advertising efforts you could quite easily wind up with a bill for thousands of pounds/dollars in wasted clicks.

how to waste money on ppc ads

So, the campaign that was achieving a CPC of 40p for each keyword suddenly falls foul of a quality score change for your ads.

Without warning your clicks suddenly start to cost £1 each.

And unless you’ve set strict budgets for the campaign, the first notification you’ll get of this is when you receive an invoice for 3x or 4x what you were expecting.

This means that you need to be able to dedicate a certain amount of time and effort to managing your PPC campaign.

Not doing so could cost you tens of thousands of dollars.

What happens if you stop monitoring your SEO?

Well, your rankings might drop, but you’ll instantly notice this in your web analytics and sales conversions.

That’s still a pain, but you won’t get a bill for £10,000 just because you forgot to turn something off.

Borrowing Authority From Google

The fact that your site ranks on the first page of Google suggests to people that they can trust your business.

borrow authority from google

After all, Google is the biggest search engine on the planet, and they wouldn’t allow just any business to be on the first page of their results, right?

Without digging into the muddy moral psychology of this, the fact remains that being present in Google’s top 10 for any given keyword allows you to borrow some of their authority.

Your organic rankings in Google are basically pre-selling your business.

With paid advertising the average person knows you’ve paid money for your ad to appear where it does.

These same people also know that your site appears in organic search based on its merit, the quality of its content, and a positive user experience.

That sends people a very strong signal about how good you are at whatever you do.

Paid ads tell prospective customers that you have the money to pay for advertising. Nothing more.

People Expect It

Have you ever gone looking for a business online…only to find that they don’t have a website?

Maybe they have a Facebook page…but nothing else.

What does that tell you about them?

In reality it doesn’t tell you anything but…you’ll probably have one internal thought, “…that’s not very professional.”

The reality is that your clients expect you to not only have a website, but to be able to find it in Google using specific keywords.

Whether you like it or not, having a presence in Google is now as expected as having a Facebook/Twitter/Instagram page for your business.

The big differences here are that your website has actual value because it’s platform independent.

You own it.

You own the content, and you can guide it in whatever direction you want.

Lots of small businesses built their online presence based on getting free organic reach through their Facebook pages.

Then in 2017 these same people noticed that their organic reach on Facebook was declining. But when they asked Facebook about this they were told “…we’re just testing something.”

Then in January 2018 Facebook dropped the hammer on organic reach. Overnight small businesses saw their ability to reach customers reduced to almost nothing.

facebook organic reach drop
Source: Neil Patel.com

And what did Facebook suggest they do to counteract their lack of reach?

Yup, buy some ads on Facebook.

Funny that…almost like it was planned years ago.

Your Serious Competitors Use SEO

No business will advertise that they’re deploying a variety of SEO strategies across their website.

The reason for this is that it would send a clear signal to their competitors that they’re trying to dominate one corner of that online market.

But – and you can take our word on this – businesses of all sizes are quietly investing thousands of pounds each month in search engine optimization.

They’re investing in content created by real copywriters.

They’re hiring the very best SEOs their business can afford to.

And they gladly do all of this because they know that the ROI on this strategy can be enormous.

Major brands are doing it. Small businesses are doing it. Your competitors are doing it.

A study by Search Engine Land found that organic traffic from search engines made up almost 75% of all traffic to business sites. This is compared to just 10% of traffic generated by paid advertising for the same sample set of businesses.

And it’s not just small to medium size businesses that rely on search engine traffic to power their marketing efforts.

Not even close.

In fact, companies like Yelp, Uber and other multi-billion dollar businesses all rely predominantly on Google to send them customers via organic search.

But…SEO Is Hard!

Paid advertising is easy.

Even if you don’t know what you’re doing, there’s a very good chance you can figure out how to create a set of PPC ads that send visitors to your website.

SEO, on the other hand, means being on a continual learning curve.

You see, the SEO landscape shifts every few months, and unless you stay at least aligned with the curve, then your competitors can outrank you.

That’s why hiring an SEO agency makes more sense than taking a DIY approach. There’s nothing wrong with managing search engine optimisation internally.

But good SEO agencies live and breathe SEO.

They’re aware of the latest trends that can impact your rankings long before you’ll read about them on some random blog.

They can guide you in everything from on-page optimisation to the best way to use content marketing to drive more traffic to your site.

So, yes, SEO is hard, but only when you don’t know what you’re doing.

But when you do know what you’re doing, the results are almost always more than worth your investment in it.

It’s Never Too Late

If you were to listen to some experts you’d believe that the “golden age” of SEO was from 2001 – 2008. You could stuff pages full of keywords and rank without really trying.

Others will gush about the good old days before the Google Penguin and Panda updates, the days when you could set up a site, buy a bunch of links and rank with zero effort.

We remember those days too, but we look at them slightly differently.

The truth is that they were the bad old days.

They were the days when black hat tactics meant anyone could grab a #1 position in Google, even if their pages were nothing but badly written content covered in ads.

The funny thing is that Google would never have had to update their core algorithm if black hat SEOs hadn’t kept trying to manipulate it.

Greed is a terrible thing.

Google’s algorithm updates can be a pain to deal with. But they’ve truly leveled the playing field for businesses who are using ethical SEO strategies to promote themselves.

It’s entirely possible for a brand new site to go from zero to tens of thousands of organic visitors within a few short months.

Summing Things Up

We hope you now have a much clearer picture of why using SEO makes more sense now in light of soaring CPCs on paid advertising platforms.

There’s a lot of misunderstanding around search engine optimisation, most of it driven by people who are trying to sell you something to do with paid advertising, or email marketing, or the latest sales funnel gimmicks.

If you take nothing else away from this article then let it be this: Never put all your eggs in one basket.

Even if you’re not willing to abandon ship on paid advertising, we would encourage that you at least take a hybrid approach in your digital marketing efforts.

And we say that for the good of your business.

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