Which is a better investment: SEO or SEM? For years, marketing teams have implicitly decided the answer is SEM, spending the majority of their marketing budget on paid advertising campaigns. However, the latest data tells us that, particularly for B2B companies, SEO has a far higher ROI.
Below, we compare SEO to SEM across a variety of dimensions to empower you to make the best decision for your organization in 2024.
Comparing SEO and SEM
First, let’s review the factors to consider when comparing SEO and SEM within your marketing strategy: conversion rate, timeframe for results, customer acquisition cost (CAC), stability, consistency over time, and company type (B2B vs B2C).
| Conversion Rate | Timeframe For Results | Customer Acquisition Cost | Stability | Consistency Over Time | B2B Marketing Strategy | B2C Marketing Strategy | |
| SEO | 2.4% | 6-12 months | $485 | More stable | Yes | Yes | Yes |
| SEM | 1.3% | 3-12 months | $802 | Less stable | No | No (for the most part) | Yes |
| SEO | SEM | |
| Conversion Rate | 2.4% | 1.3% |
| Timeframe For Results | 6-12 months | 3-12 months |
| Customer Acquisition Cost | $485 | $802 |
| Stability | More stable | Less stable |
| B2B Marketing Strategy | Yes | No |
| B2B Marketing Strategy | Yes | No (for the most part) |
| B2C Marketing Strategy | Yes | Yes |
Conversion Rate
On average, Google’s organic results attract more than 10 times the number of clicks than paid results, which in turn leads to a higher conversion rate.
Prospective customers value organic search content over paid ads because they find the content more relevant and trustworthy. This perception wasn’t built out of a vacuum but rather by design. Google constantly updates its algorithm to reward informative, useful content by ranking it highly in its search engine. This, in turn, makes that content more visible to a wider audience who tend to perceive it favorably. In contrast, paid ads are both clearly marked as such, and are not as thoroughly vetted by Google, detracting from customer trust.
Timeframe for SEO and SEM Results
You can expect a comprehensive SEO content strategy to result in a measurable increase in traffic and marketing qualified leads within 4-6 months. This is initially a gradual process because it takes time to build trust with Google. There are many factors that affect this exact lead time, including:
- Competition: Competitors who are already investing in SEO will have a head start, but we’ve found that combining the Hub & Spoke model with high level SEO strategies such as quantitative reports, original organization, and distilled expertise allows companies to rank in even the most competitive markets.
- How established your site is: Newer websites will take longer to index, and have lower domain authority than more established ones.
- Output of high-quality content: This is critical to boosting your site’s presence in Google’s search rankings. If you build a robust library of content and hyperlink these assets in blog posts, product pages, and other pieces of marketing collateral on your site, Google will determine that your organization is an authority in your industry and rank your site higher in its search algorithm.
If you develop a sound content strategy based on satisfying search intent, develop an editorial calendar, and establish a regular publishing schedule, Google will reward your site with a similar level of authority to a news website in your particular niche.
By contrast, SEM campaigns tend to take around 3 to 12 months to establish. While it’s typical to see greater website traffic as soon as the first day of a SEM campaign, a campaign’s true efficacy is determined by total closed deals as well as CAC. Building out the data to determine this, and any alterations you may need to make in your strategy for optimal results, will ultimately take time.
Ultimately, both SEO and SEM are effective channels for attracting potential customers, and both take time to develop and execute effectively. However, SEO has long-term benefits that remain even after a paid campaign has ended.
SEO vs SEM Customer Acquisition Costs
Based on our data across industries, the average inorganic CAC is approximately 65% higher than the average organic CAC. SEO and content marketing are the marketing channels with the lowest CAC, while paid search and paid social have the highest. This is because the cost of hiring an SEO agency or team tends to remain consistent, even as traffic and conversions grow over time. In contrast, with SEM, you are paying for every click.
Consistency Over Time
Stable search rankings are a crucial part of any marketing strategy, as we know that 75% of users will never scroll past the first page of a Google search. Google wants to reward the best pages on the internet for a given keyword with first page rankings, so it’s important to review published content regularly to ensure relevance, page speed, layout, and design. If you make these optimizations a regular part of your marketing routine, your rankings will rise consistently.
SEM, on the other hand, will fluctuate depending on your competitor’s bidding strategy, which is something you don’t have control over. SEM requires a much more reactive approach in case the landscape suddenly changes.
Business priorities are constantly shifting, and marketing teams must shift their strategy accordingly. It’s important that while you’re making these necessary pivots, you have other marketing initiatives in place producing sustained (if not exponentially increasing) results.
An effective SEO strategy can do exactly this. Once Google indexes your site, determines that your content is high-value, and boosts your rankings in search, the number of visitors to your site (as well as subsequent conversions) will dramatically increase week over week.
This produces consistent results to help you meet your numbers while you focus on other marketing initiatives. You can rest easy knowing that your organic content is visible and available to customers 24/7 and will not expire on any given date. This is not the case with SEM ads, which will stop displaying when the budget runs out.
Differing Needs for B2B or B2C
Whether you decide to pursue an SEO or SEM marketing strategy (or both) will also depend on if you have a B2B or B2C business model. B2B businesses tend to offer more complex products, which results in longer sales cycles with higher CACs. As such, prospects will need to be nurtured throughout their buying journey with different types of educational content, such as blog posts, case studies, service pages, and webinars. This is where a comprehensive SEO-based content strategy is incredibly useful.
In contrast, B2C products are often simpler and have shorter sales cycles, so when customers view the content on your website, they will likely be closer to the purchasing phase of their buying journey. An SEO content strategy can still definitely help distinguish a B2C company from its competitors, but an SEM strategy will also be effective for businesses with simpler products or services.
Other Scenarios In Which SEM Edges Out SEO
Recent studies have concluded that SEM should be used over SEO only in one of the following three scenarios:
- If your company is earlier-stage and doesn’t have a reliable source of sales leads, and is comfortable gaining new customers at a higher customer acquisition cost as it builds up a more sustainable inbound lead generation program
- As a precursor to an SEO campaign for the purpose of determining the keywords with the highest conversion rate
- To complement a targeted SEO strategy wherein searchers see your website at both the top of the organic and paid results
However, for B2B companies and B2C businesses with a high customer lifetime value, a comprehensive content-based SEO strategy will generate ROI that consistently outpaces SEM advertising campaigns. Most of our clients end up spending their search budget at a ratio of approximately 75% SEO and 25% SEM.
SEO vs. SEM: Which Is Better for 2024?
Deciding how best to implement a strategy that includes both organic and paid search is obviously a complex matter. Indeed, building a strong SEO foundation requires time, effort, and expertise, which is why many marketing teams outsource these efforts to an agency. If you’d like to learn more about how we can work together to build a campaign for your organization, contact us here.
