October 02, 2006
Blog Entry

Bad News: Search Engine Optimization Firm Growth Screeches to a Near Halt

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By Anne Holland, President

Every year for the past five, MarketingSherpa has conducted a research study into the state of the search engine optimization (SEO) industry -- the hundreds of firms and consultants who help marketers optimize Web sites to gain more search traffic.

SEO-driven traffic is the most desirable you can get from search engines. Why? Well, unlike PPC search advertising, there's no cost per click. That's because the traffic comes from so-called "organic" listings, the search results the engine shows naturally without being paid to run your ad.

Plus, clicks from these organic listings on average can convert as well -- or even better -- than the clicks from paid ads.

The big marketing debate over search engine optimization was not whether to do it -- it's self-evident you'd want to appear at the top of free rankings for keywords important to your brand. No, the big debate has been instead about whether you should do it in-house versus hiring an external expert to help you with it.

I've always been of the personal opinion that if a complicated marketing tactic can make a big difference to your bottom line, you'd better get expert help with it. But, that's just an opinion. What matters is the data.

That's why last year we conducted research, asking more than 2,000 marketers whose sites had been optimized, what the results were and whether or not they used an outside expert. The data was phenomenal. The marketers who had used in-house SEO resources saw an average 73% lift in overall site traffic.

The marketers who outsourced SEO to an expert saw an average 110% lift in overall site traffic.

With results like these, it made perfect sense to me when our tracking also revealed the SEO firm industry had grown year over year revenues by 124% from 2004 to 2005. I was delighted to see such a leap in marketers following data-proven best practices.

All of which makes the results just in for this year even more shocking. According to MarketingSherpa data just in, SEO industry year over year growth came to almost a complete halt in 2006. Total revenue growth was a teeny tiny 6.7%.

Did the SEO firms do a bad job? Not that I can tell. In fact, the average SEO firm added 76% more expert staffers to do the work better. In an industry where man hours are to a great degree what distinguish great campaigns from failing ones, this is a good sign. (See link below to more study data.)

In addition, there's positive evidence from marketers themselves. This August, we asked more than 3,000 marketers what tactics get the best ROI. Traditional online ads got the worst response at 24% saying banners had great ROI. Paid search marketing (PPC) did much better with 57.5% of marketers saying their PPC campaigns got great ROI.

But, then came SEO, now King of All Tactics. ROI-wise at least. SEO headed the list with a remarkable 69.2% of marketers saying they got great ROI from it.

With all that fabulous ROI, plus years of proof that in-house SEO just doesn't do as well as outsourcing, why is SEO industry growth sagging so dramatically?

It's a mystery to me.

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