SEO vs. PPC Statistics: Conversion Rates Compared
After 15 years of comparing SEO and PPC results, we’ve accumulated a mountain of data about their respective conversion rates. While there are many interesting statistics below, the primary one most people want to know is, on average, how conversion rates differ between the two forms of search marketing. Here is that statistic:
Average Conversion Rate Across All Industries
However, it actually isn’t that useful to look at average conversion rate across all industries since they vary so widely. For instance, SEO converts in high-tech manufacturing at 3.0%, vs 1.1% for Luxury Goods.
Without further ado, below are the relevant statistics on SEO vs. PPC conversion rates from our client dataset, broken down by industry:
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%|
Note: Our data skews toward B2B industries, and among B2C industries, we have had disproportionately more eCommerce clients than any other type.
The Biggest Gaps in Conversion Rate Between SEO and PPC
SEO nearly always converts at a higher rate than PPC (the exception being Higher Education), but the gap is particularly large in some industries. The five industries with the largest differential are, in order:
Financial Services – SEO converts customers at 7.3x the rate of PPC
Luxury Goods – SEO converts customers at 3.7x the rate of PPC
Real Estate – SEO converts customers at 3.5x the rate of PPC
Medical Devices – SEO converts customers at 3.4x the rate of PPC
Legal Services – SEO converts customers at 3.4x the rate of PPC
At first glance, these industries may seem disparate but there are key similarities. The first is that all five rely heavily on trust and prestige—prospective clients for both attorneys and investment advisors, for example, tend to seek assurance that the firm they’ve chosen to work with is ranked at the top in their field. High organic rankings are viewed as a sign of industry leadership, whereas paid search advertising is viewed as an activity in which any business can participate.
For two of these industries, Financial Services and Medical Devices, SEO compares favorably to PPC because companies in these fields tend not to invest in SEO, leading to relatively high conversion rates for the few that do. Particularly when firms in these industries invest in thought leadership marketing, they tend to see higher conversion rates because the validation element of the sale—that is, the impression that the company can be trusted—is so well-addressed.
How Conversion Rate Differences Between SEO and PPC Translate to Budget
It’s helpful to translate these numbers into real-world dollars and cents in order to see the impact your decision to invest in SEO vs. PPC may have. To illustrate this difference, let’s take a Commercial Insurance firm with an annual online marketing budget of $250,000.
Using data from one of our clients, we can estimate that spending the entire budget on SEO would yield ~11,000 new, targeted visitors per year. Applying the SEO conversion rate of 1.7%, we can expect 187 marketing qualified leads (MQLs) in that time period. With a close rate of 20% on MQLs, that translates to 37 new clients per year. The value of a first-year customer to this firm is about $29,000, making the revenue results of their SEO spend $1,073,000. Subtracting their SEO spend of $250,000, their return-on-spend is $823,000.
For the same client, spending the entire budget on PPC would yield ~8,600 new, targeted visitors per year. Applying the PPC conversion rate of .9%, we can expect 77 marketing qualified leads (MQLs) in that time period. At the same close rate of 20%, we get 15 new clients per year. That adds up to $435,000 in new revenue from PPC. After subtracting the Google Adwords spend, your final return is $185,000.
This example illustrates how much more efficient SEO is at converting customers than PPC. However, there are intangible reasons why PPC remains a good investment. For instance, PPC allows you to try out different keywords before spending months or years investing in them through SEO. Also, there is a compounding value to being seen by prospective customers in both the organic and paid search results, for the same reason that being seen in both the search results and on social media is beneficial to companies. For these reasons, a mix of SEO and PPC tends to make sense. Most of our clients end up spending their search budget at a ratio of approximately 75% SEO and 25% PPC.
Investing in SEO: In-House vs. Outsourced
Once you’ve decided how much of your budget to allocate to SEO, you still need to decide whether to manage the SEO campaign in-house or hire an outside agency. We’ve explored this topic in-depth on our blog. An in-house marketing team will have easy access to experts on your particular business and will be familiar with your branding. But the cost of maintaining a dedicated writer, editor, graphic designer, and strategist usually exceeds the monthly fees of an outside agency.
On the other hand, working with an outside agency will require an alignment period to make sure they understand your particular business and goals; less direct control over content production; and longer turnaround times for content revisions. But these disadvantages are offset by their greater institutional marketing expertise, access to specialized tools, and overall lower cost. The best agencies will also employ subject matter experts to bridge the gap between their SEO teams and your own technical staff. These advantages are why we recommend most companies outsource their SEO. If you’d like to explore an SEO relationship with our agency, feel free to get in touch.