SEO vs SEM – Return on Investment Explained!

SEO vs SEM
August 9, 2021 Dennis 0 Comments

Back in 1994, an online transaction took place for the very first time. This was a pretty low-key affair compared to today’s standards and involved two friends trading a Sting CD over the internet. 

Looking back 20 to 25 years ago, many businesses were unsure of whether the internet was an important business tool or not. In 1999, the UK directory company, Yellow Pages made a $665 million investment in Yellow Book USA. 

The business ignored the potential of the internet to focus on print, and 14 years later the business collapsed owing more than £2 billion.  

Today, nearly everyone in business understands the necessity of having an online presence. What is not always understood is how to optimize that web presence, the different methods of doing this, and lastly, how to maximize the return on their investment. 

This article is here to explain some of the differences between SEO and SEM, and what the return on investment should be. 

What does SEO involve, and why is it important?

SEO is a method or process to make your website appear higher up on search engine result pages or SERPs. SEO involves three different areas; technical, on-page, and off-page optimization.

When performing search engine optimization, it is essential that best practices are used. 

In the past, quick fixes and what might be called, black hat SEO, could be used to achieve a high ranking on results pages. Some of these methods can still work today, and these techniques include keyword stuffing and hidden links. Indeed, there are many bad practices that some SEO ‘experts’ still use now to show quick results to clients. 

To keep your website high on SERPs requires your SEO to avoid these types of practices. SEO can be a low-maintenance and financially viable method of increasing traffic to your website when done properly. 

SEO is made up of on-page or on-site SEO, off-page SEO, and technical SEO. 

On-page SEO

This process involves optimizing all the pages of a website to produce better search results. This refers to the visible and invisible content of the website, text, graphics, video, and the source code or HTML. 

Some areas covered by on-page SEO are as below: 

  • Auditing and optimizing content
  • Title and meta tags
  • ALT tags
  • Proper use of keywords and key phrases
  • Image optimization
  • Header tags

Content needs to be audited to check for outdated information and to see what is working and what isn’t. If auditing doesn’t take place then you will not be aware of whether your content is providing a good ROI. 

Even though Google uses more signals than ever to rank web pages, one area is still important; keywords.

Keywords must be relevant and used correctly. Keyword cannibalization can be a common problem, and if you use the same keywords over different pages you can harm your rankings. Simply put, your web pages will be competing with each over for search results. 

Areas that have changed with Google are their new focus on search intent and user experience. If the keywords chosen do not match the user’s intent, the website will rank poorly. Similarly, if the UX doesn’t match Google’s metrics it can also hurt your ranking. UX must be taken into account when performing SEO. 

Off-page SEO

This area of SEO is all about getting exposure and building awareness of your website. It refers to methods of improving the ranking of your website away from the actual site itself. Perhaps the biggest part of off-page SEO is through link building. 

Link building refers to the acquisition of hyperlinks on other websites that then direct individuals to your own site. Just as there are poor practices in on-page SEO, so there are on off-page SEO too. 

If you obtain spammy backlinks or low-quality links then you may at first notice an improvement in your search engine results, but as a long-term strategy, it will fail. Backlinks must come from websites that are relevant and are trusted. 

Backlinks that are gained organically are extremely helpful but as long as the link is relevant then there are other ways to grow them. Guest posts, static and interactive content and social media can all provide backlinks, and as long as they are high-quality they can help website visibility. Backlinks can be seen as a kind of vote of confidence in your website and as a sign of trust. 

Off-page SEO can also refer to social media marketing, print advertising, and PR work, and anything else that is outside of the actual website’s code and content. 

Technical SEO

This area, while still being a process to improve your site’s ranking on SERPs, deals with very different areas to on and off-page SEO. 

It refers to the technical side of optimizing your website and server to improve the visibility of a website. This can involve speeding up a website, ensuring the site is secure, and that everyone can access it regardless of their device. 

Some areas that should be checked when performing technical SEO are: 

  • Structured data markup
  • Ensuring the site is mobile-friendly
  • Does the site use AMP?
  • XML sitemap
  • Does the site use SSL?
  • Removal of duplicate content
  • How fast does the site load?

Google doesn’t just rank websites on their content, keywords, and backlinks. It also looks at how fast and how smoothly a website loads. It will also want to see that the site is mobile-friendly. 

Today, there are more people using smartphones and other mobile devices to gain access to the internet than before. Internet access through mobile devices is outstripping laptops and desktops now.

So, it is essential your site works well on these devices, and if your website is suitable you may want to consider using AMP, or accelerated mobile pages, to speed things up. 

Websites can be sped up by minifying code, using one CSS stylesheet instead of inline CSS or multiple stylesheets. The hosting, server, and domain name service provider can also affect how fast your website loads. 

What is search engine marketing?

SEM is a process to improve the results returned by search engines, just like SEO. However, although SEM uses some of the best practices of SEO, there are many differences, and search engine marketing can produce faster results. 

SEM refers mostly to paid advertising. One of the most successful ways to use paid advertising is through search ads. Most businesses would use Google Ads, and/or Bing Ads. The differences between these two options are size and cost. Google Ads have twice the network that Bing has, but they are also more costly. The click-through rate on Google Ads is also much higher than Bing, perhaps signifying a better ROI. 

The reason that you might want to use search advertising is that it can provide more visibility for your website than an organic search may do. Campaigns such as these are quick to set up, and the adverts are not only non-intrusive to a user, but they may be highly relevant to their searches. 

How effective sponsored adverts are can depend on your business and the industry you are in, and the marketing budget you have available. 

Two other types of adverts can be used in these campaigns, display and YouTube ads. 

Display adverts refer to the text and graphic adverts, such as banners, that appear on websites and social media. They usually use a charge-per-click revenue model and can be seen by many website users as intrusive. 

YouTube advertising comes in several forms: 

  • Sponsored card ads
  • Display ads
  • TrueView ads
  • Bumper Instream ads
  • Non-skippable ads
  • Overlay ads

Out of all these options, TrueView is the most popular with viewers and businesses. From the user’s viewpoint, they are good because they can be skipped, making them less annoying. From the point of view of a business, they are effective both financially, and with audiences. 

Businesses only need to pay for TrueView adverts after 30 seconds of the video have been played. This means no money is wasted on displaying adverts to uninterested parties. Anyone deliberately watching the whole video is more likely to have an interest in the product or service being advertised. 

SEO Vs SEM: What are the differences?

Although there are some similarities between these two processes, including the use of best practices and them having the same goal, there are differences too. 

When it comes to SEO, you get the following: 

  • Organic results and featured snippets
  • You get cumulative results
  • Higher click-through rate

SEM, however, results in the following: 

  • Every click or impression has to be paid for by you
  • You will get immediate results
  • Easier to test and refine

Good SEO will return organic search results which are more likely to be clicked on if they are returned on the first page. 

Search engine marketing techniques can provide very fast results, but every impression needs to be paid for. However, by using A/B testing of landing pages and refining adverts, sales conversions can be improved easily. 

SEO Vs SEM: What are the similarities?

The purpose of SEO and SEM are the same. They are used by businesses to improve the visibility and exposure of their websites. Whether a business is selling a tangible product or a service, they need traffic and conversions. SEM and SEO are both methods to help with this area. 

The idea of SEO and SEM is that they won’t just drive people to your website they will drive relevant and quality traffic. It is pointless having uninterested visitors as you will end up with an increased bounce rate and this can lead to you dropping down the SERPs. 

Both processes can help you to get to know and understand your audience as you see what content is relevant to them, and what appeals, and what doesn’t. Similarly, as both SEO and SEM are dependent on keywords, you will also understand the user intent more when you analyze your results. 

They also both involve ongoing testing and optimization. Adverts need to be tweaked, failures ditched, and content updated.

With SEO, websites need maintenance to remain optimized and to keep up with Google’s latest metrics. Poor backlinks need to be noted and disavowed. 

What should you concentrate on, SEO or SEM?

When deciding which is better for your business, consider the following thoughts. 

What are your immediate and longer term goals?

What are you looking to achieve with SEO and SEM? If you want immediate results then SEM will achieve this. Once your campaign is launched,web  users will be able to see adverts straight away. 

SEM can be used to target a specific audience or location. So, if one of your goals is to grow in a specific area or demographic, then SEM can help. 

It is also easier to test as adverts can be changed quickly, and A/B testing can be applied to landing pages for improved results. 

How healthy is your business?

Because SEM can deliver immediate results, it can be a way to increase sales and revenue in the short term. SEO cannot instantly deliver traffic in the same way that sponsored adverts can. A new business, or one that needs a cash injection, may benefit from SEM. 

What are your margins?

Can you afford to run PPC advertising that could amount to tens of thousands of dollars a month? SEO does not only have a higher click-through rate but it costs you nothing anytime a user clicks on a result. 

The lifetime value of the two processes

SEM does indeed give quick results, but they are temporary. Once the campaign is finished and you cancel your advertising, there will no longer be any way for a potential customer to click through. 

SEO on the other hand produces slower but far longer-lasting results. SEO will pay off for your business far longer than SEM will and can result in consumers returning more often. 

Are there reasons for combining SEO and SEM?

There are indeed plenty of reasons for using both SEO and SEM as part of your digital marketing campaign. 

SEM can provide data to help with SEO

Because of the way SEM works, you can use the data from any advertising campaign to adjust your SEO. 

This means that you can see what keywords and content worked in advertising to adjust the content on the website itself. Bounce rates on landing pages can be analyzed, and the content of these changed accordingly.  

Use a remarketing campaign to get the most out of your SEO

These campaigns can significantly improve awareness of your brand and website. A remarketing campaign specifically targets individuals who have already visited your website. 

If someone browses your website, they will then see an advert when they visit another website. This can be used to try and convert a sale. 

For instance, if someone browsed a product, such as a sneaker, on your site but didn’t make a purchase, the advert they next see could display that very same product. To help with conversions, the advert could also show a time-restricted special offer. 

Own the search engine results pages

By combining SEM and SEO, you can not only have sponsored adverts at the top of the page, but you can also dominate the results. This can result in the following happening: 

  • Google Site Links
  • Featured snippets
  • Multiple internal pages
  • Multiple external pages

When SEM and SEO are done effectively it can also result in multiple organic returns on search engine pages. You may be displayed as one of Google’s enhanced listings, or a featured snippet. 

This would depend on what keywords and how many of them you are targeting, plus how you structure your pages, but you could show up several times on the SERPs. Alternatively, external pages including social media accounts can also be returned from searches. While these do not link directly to your website, they will raise awareness, and push competitors further down the search results. 

Gain customer insights

Part of your marketing campaign will involve keyword research. While you are analyzing this area you can also delve into what keywords your competitors are targeting. You can also see how they rank due to those keywords, and which content they own is shared the most.

Using a combination of SEM and SEO can provide all the above benefits, but when it comes down to it, what is the ROI going to be for these processes?

Comparing the ROI of SEO and SEM

You have a fantastic SEM campaign in place. Your SEO has stripped away content that didn’t work, your keywords are finely tuned, and your website runs smoothly and provides great UX. How much is it all costing though, and what return on your investment are you getting? 

Return on investment for search engine marketing is fairly easy to calculate if you are using the PPC model.

Calculating return on investment on SEM PPC

There is a simple formula for calculating ROI on PPC. Take your revenue, minus the cost, then divide this number by the cost and multiply by 100. This will give you the ROI as a percentage. 

(Revenue – Cost) / Cost x 100 = ROI% 

Cost can refer to more than one area, however. The simplest way is to calculate the cost as the amount that was spent on advertising. 

While the above method will give you the ‘return on advert spend’, it doesn’t take into account how many times your advert was shown, or the number of impressions that occurred. 

Dividing the total profit by the number of impressions, and by the number of clicks, will show you your ROI on both of these areas. 

Calculating the ROI on SEO

Predicting the ROI on SEO is difficult because it can depend on many factors such as what industry a business is concerned with and other external factors. 

When estimates are made about potential traffic, search volumes, and click-through rates, a rough prediction could be made for ROI. It has been reported that the average ROI for SEO is about 175%. 

That means for every $100 invested in SEO, you should see $275 back. This is only the average amount and while it may seem low, much higher returns can be expected when SEO is performed correctly. 

But which one will give you a better return on your investment, SEO or SEM? 

Is SEO a better return on your investment than SEM?

The main difference between SEM and SEO is the longevity of their results, but there is also the ROI to consider. 

Search engine optimization is something that can keep on giving as long as it is maintained. Basically, SEO pays off for life if done properly and only involves a low-maintenance fee. 

SEM, however, can provide a very costly short-term solution. Comparing the two together can be beneficial. 

For the purposes of this example, imagine that you are spending $2,000 per month on SEM. The costs of these adverts will never drop, and will more than likely increase due to the nature of competition. You may need to increase your marketing budget to target a bigger area, and this could result in a lower ROI. 

Once you stop that particular campaign, there will be no more benefit. SEO however has life-long benefits with a continuous return on investment. 

When it comes to SEO, around $500 per month would be enough to keep your site maintained and holding its ranking on SERPs.

Even if you had to pay $2,000 due to being in a competitive space, your outgoings would never increase, and you would get more click-throughs from organic search results.

Some final words…

SEO and SEM complement each other in several ways. They can both help your understanding of the most effective keywords that you should be targeting. They can help you to analyze your competitors. And SEM can help you to improve and strategize your SEO. 

For many businesses, using both of these processes to help improve your visibility and traffic can work wonders. However, when it comes to a return on investment, SEO may take longer to produce results than SEM, but those results will last much longer. 

After an SEO audit has been performed, it is necessary to follow best practices and avoid shortcuts. Building high-quality, relevant backlinks are one way to increase your ROI and they are the cornerstone to good off-page SEO. Once a high search ranking has been achieved through SEO, maintaining it could bring greater returns than an SEM campaign with ever-increasing costs.