Most startups should skip SEO... for now

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This week’s newsletter is sponsored by the Digital PR agency Search Intelligence. See their case study at the end of the newsletter.

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This is going to be part 1 of a two-part series. To be clear, part 2 will not rebut my recommendation that most startups are safe ignoring SEO, but it will give some instances where SEO should be a focus and how startups can give attention to this channel. Stay tuned.

SEO suffers from a serious expectation gap that, from my experience guiding companies on SEO strategies, too often leads to disappointment. SEO is saddled with an unrealistic goal that is more appropriate for paid marketing, and when it misses that target, internal or external heads roll.

There is a canyon of a difference between paid marketing and organic search, not because of the channel itself, but where in the funnel each of these efforts lives.

Paid vs organic

Paid marketing is more appropriate for the bottom of the funnel, so therefore, it is far more likely that there will be an immediate and measurable conversion. Paid spending needs to have some sort of direct and measurable response otherwise, it might be hard to justify the budget.

Throughout my career, I have asked many companies to elaborate on their SEO conversions, and a very large percentage of them are unsure of the value of their SEO channel. If anyone had the same data blindness for a paid marketing channel, they would immediately stop the spending.

For SEO, this reality is allowed to stand because this channel is more likely to be at the top of the funnel, which, in most cases, will not convert immediately. When it eventually converts, it will be very challenging for it to be tracked and measured. Depending on the product type, there could be dozens of touchpoints with a user before they convert.

(Tangent alert: I think none of those search results above impact conversions for the tools themselves and are only good results for sites that monetize traffic immediately with affiliate revenue. I doubt any SAAS b2b product should prioritize SEO over other channels. In addition, when Google launches SGE, it will take away the revenue of those affiliate sites as they give away the information for free. This is a search category where I see traffic declining to the currently ranked websites by 50-80%. See the SGE result below. )

Missed expectations

The gap in measurement will lead the individuals paying for that SEO effort to declare that it “doesn’t work” and was not a good investment. This may lead them to terminate an agency or employee, try again with another resource, or give up forever.

This may be a measurement issue or the channel, so let’s rewind.

Managing Expectations for SEO

The company's strategic goals should align with SEO outcomes before deciding to invest in an SEO effort. Those goals should be specific, not just generic growth goals like “grow the base by 10%”.

A good example of a specific goal is to “reach $1m of ARR by Q3 so we can start raising a Series B.”

With this goal, you can decide whether SEO or another channel would be the best way to attain this goal. The answer for an e-commerce or low-cost self-serve product could be a resounding yes, but the answer might be no for other companies where conversion is slower.

This isn’t to say SEO will not work; rather, it’s putting a line in the sand to declare that SEO might not best use finite resources at this particular juncture.

SEO done effectively might, and usually is, the most profitable marketing channel; however, it takes a fair amount of time, work, and budget to unlock that treasure.

Unless a category is a complete Blue Ocean with untapped demand, SEO will take months to show even small amounts of traction.

Those resources would be more appropriate in a direct response channel for a startup with constrained resources and possibly a target on its back.

Example with numbers

To put this into specific numbers, a monthly SEO investment could cost upwards of $50,000 if a full-time employee or agency is shepherding the project. In addition to this dedicated resource’s compensation, ancillary costs come from content production, engineering time, software, and cross-functional support.

Since SEO is a sustained effort, this isn’t just a one-time expense but likely extends for at least six months. Our monthly estimate of $50,000 for six months gives a total investment of $600,000. (This estimate isn’t entirely unreasonable, and I have seen many companies, even startups, spend a lot more once you factor in all the direct and indirect costs.)

For a startup in a race to survive and to achieve a milestone, this $300,000 could be very effective in a paid advertising campaign that, even if it is spent towards breakeven, would be adding users/revenue that could then help the company make the case that they deserve that next round of funding.

At the outset of an SEO campaign, it would be difficult to have that same level of confidence in returns that you might have for paid marketing.

While this thought exercise of thinking through the best use of funds and resources applies to any size or stage of company, I think it is most acute for startups where a mistake in deploying finite resources could be fatal.

Later-stage companies will usually have more breathing room to recover from mistakes. Still, in my opinion, they also shouldn’t dive into an SEO effort without first determining their objectives and expectations.

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