After many years of analyzing SEO and PPC results, we’ve accumulated a wealth of information about their respective conversion rates. While there are many intriguing statistics here, what most people are interested in is the difference in average conversion rates between these two search marketing models. Here is that statistics:
Average Conversion Rate Across All Industries
- SEO: 2.4%
- PPC: 1.3%
However, examining average conversion rates across all industries is not particularly advantageous, as they vary greatly from one another. For example, the search engine optimization effectiveness of high-tech manufacturing is 3.0%, while that of luxury goods is 1.1%.
Without further ado, listed below are the industry-specific SEO and PPC conversion rates from our experiences.
SEO vs. PPC Conversion Rates by Industry
|Industry||Average SEO Conversion Rate||Average PPC Conversion Rate|
|E-commerce / Retail||1.6%||1.3%|
|Higher Education & College||1.4%||1.7%|
|Manufacturing & Distribution||3.0%||1.0%|
|Oil & Gas||1.7%||1.5%|
|PCB Design & Manufacturing||2.3%||1.4%|
|Sales & Marketing||1.8%||1.3%|
The data is biased toward B2B companies, while in the B2C industry, conversion rates for e-commerce companies vary widely across industries.
What is the Largest Conversion Rate Differences Between SEO and PPC?
In almost all cases, SEO converts at a higher rate than PPC (higher education is an exception), although the gap is particularly wide in some industries. The five industries with the largest disparities are listed below.
- Financial Services – SEO converts customers at a rate 7.3 times higher than PPC
- Luxury Goods – SEO converts customers at 3.7 times the rate of PPC
- Real Estate – SEO converts customers at 3.5 times the rate of PPC
- Medical Devices – SEO converts customers at 3.4 times the rate of PPC
- Legal Services – SEO converts customers at 3.4 times the rate of PPC
These industries may not look identical at first glance, but they share a great deal of similarities. First, all five industries rely heavily on trust and prestige; for example, potential clients of lawyers and financial advisors tend to seek reassurance that their chosen firm is a leader in its industry. High organic rankings are considered a sign of market leadership, and paid search advertising is considered a campaign in which any organization can participate.
In the financial services and medical device industries, search engine optimization compares favorably to paid advertising because few companies in these industries participate in search engine optimization, resulting in relatively high conversion rates for those that do. Especially when organizations in these industries invest in thought leadership marketing, conversion rates tend to be higher because the validation aspect of selling – the feeling that the brand can be trusted – is well addressed.
How the difference between SEO and PPC conversion rates affects budgets?
It is helpful to translate these numbers into real-world dollars and cents to determine the potential impact of investing in SEO versus PPC. To illustrate this difference, consider a commercial insurance company with an annual online marketing spend of $250,000.
Using statistics from one of our clients, we can estimate that a full investment in SEO would result in approximately 11,000 new, targeted visitors per year. Using an SEO conversion rate of 1.7%, we can expect 187 marketing qualified leads (MQLs) within a specified timeframe. If the MQL conversion rate is 20%, this equates to 37 new customers per year. For this company, the first year’s worth of customers was approximately $29,000, generating $1,073,000 in revenue from their search engine optimization spend. After deducting their $250,000 in SEO spending, their return on investment was $823,000.
Spending the entire spend on PPC for the same client would generate 8,600 new focused visitors per year. Using a PPC conversion rate of 0.9%, we can expect 77 marketing qualified leads (MQLs) in this timeframe. At the same 20% closing rate, we gain 15 new customers per year. This equates to an additional $435,000 in PPC revenue. After deducting the Google AdWords spend, your final return is $185,000.
This example shows that SEO is much more effective than PPC when it comes to converting visitors into buyers. However, there are intangible factors that make PPC a worthwhile investment. For example, PPC allows you to test a variety of keywords before investing months or years through SEO. In addition, there is a compounding advantage to seeing leads in both organic and paid search results, in the same way that organizations are seen in both search results and social media. For these reasons, the combination of SEO and PPC is usually prudent. Most of our clients end up allocating about 75% of their search spend to search engines and 25% to PPC.
Investing in SEO: In-House vs Outsourced
After deciding how much of your budget to dedicate to SEO, you must choose whether to run the SEO strategy internally or employ an outside agency. An in-house marketing staff will have easy access to specialists in your industry and will be familiar with your brand. However, the cost of employing a full-time writer, editor, graphic designer, and strategist typically exceeds the monthly costs charged by an outside agency.
Working with an external agency, on the other hand, will necessitate a period of alignment to ensure that they understand your business and objectives, less direct control over content development, and longer turnaround times for content updates. However, these shortcomings are outweighed by their superior institutional marketing experience, access to specialized technologies, and overall reduced cost. The top services will also employ subject matter experts to bridge the gap between their SEO teams and your own technical personnel. We recommend that most businesses outsource their SEO because of these benefits. Feel free to get in touch if you’re interested in a potential SEO partnership with our firm.
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