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Noah
Noah
Jan 19, 2025, 10:36 AM
Forwarded from another channel:
Forwarded thread from another channel:
Edward Bate
Edward Bate
Dec 3, 2024, 2:57 PM
Anyone got any strong thoughts / approaches on Customer Acquisition Cost for SEO? Got asked this by a private-equity-type person involved in one of my clients, building out their models etc.
My initial thoughts are that it's not as applicable nor clear-cut as a CAC / CPA from a paid search perspective as those operate on a much more direct spend & acquire model - you run paid search for a couple of months, can figure out costs, leads, customers etc. and get your number, so you can then make the case if the CAC is $50 and customer LTV is $150, take out expenses etc. and figure out where on the curve you're willing to go to.
SEO however will always be partly a function of capturing baseline brand demand and conversions irrespective of whether you're pushing media activity in market or not, plus it will also be helped by other media activity and all contribute together - you can then split it out in Analytics, attribution etc. but I feel like that's working the other way.
Cost-wise - it's either e.g. my external consulting fees, plus increased budget for development work / content writing / link building etc. and yes if those programs are central to the client and what's getting growth (e.g. we spent $5k on 5 blog articles currently driving X leads, we've got a content plan for 30 more) then that's reasonable to put a CAC figure on in isolation, but not always the case.
Welcome any thoughts!
Jared McKiernan
Jared McKiernan
Dec 3, 2024, 3:20 PM
This is related to the ongoing question of "why is PPC spend so much higher than SEO?"; which I've never been convinced by the typical SEO take that companies should spend way more on SEO.
The reason SEO really works is that most of the costs *don't* scale. You just have to do it in the right way.
Now, if you're comparing a few different SEO programs with different forecasted results, then you can put together some analyses here, but I don't find that this is the typical scenario.
Also, don't include branded search in the SEO bucket you're analyzing here, since that isn't incremental.
Callie Scott
Callie Scott
Dec 3, 2024, 3:22 PM
It really depends on the business you are talking about and what their conversion model looks like…. but in chatting with someone trying to model your works value within an org….
If private equity is involved and looking to build models, then I would assume that this business is engaged with multiple marketing channels aside from PPC and organic search.
In those situations I find it is helpful to zoom out and place SEO within that context.
On the range of TV ads, Billboards, Influencer marketing, traditional PR, radio ads, corporate sponsorships etc. etc. and paid search (which can give you a pretty clear CPA) - SEO is sitting somewhere in the middle with regards to how easily it can be measured.
The later have been around for _significantly_ longer than paid search and SEO.
In my experience, the more “traditional” marketing streams are still able to be factored into models. And have been for a long long long time.
So i’d zoom out, ask your model person “How would you account for/model for, say, the tv ads we run? What data do you use there?”
And work backwards from there.
No doubt you will have way more data than that department does, so the model can be more accurate.
And since it is working off the equity persons existing model, but you are making it more accurate,. they should be pretty satisfied.
Jared McKiernan
Jared McKiernan
Dec 3, 2024, 3:37 PM
One related thing that imo shouldn't be done, but I've seen at a few VC-backed companies over the years, is "blended CAC"...where you combine SEO + SEM acquisitions, and apply the cost to the combined search customer acquisition. This is an easy way to cheat for more SEM spend (lower-end VCs love pushing SEM spend up by using this metric).
filip silobod
filip silobod
Dec 3, 2024, 3:47 PM
in the old ga you can set up under assisted conversion to filter by organic traffic and exclude homepage
Mika Lepistö
Mika Lepistö
Dec 3, 2024, 4:16 PM
I started to write some stuff but basically @Callie Scott covers it. To summarize, I'd say wanting to establish 1:1 or some other ratio for "data driven" decision making leads people to ignore the complexity of consumer behavior unless you're only doing 1 thing.
Will Critchlow
Will Critchlow
Dec 4, 2024, 10:29 AM
I have started drafting a piece about considering SEO investment as CapEx that depreciates, but it's a bit finance geek at the moment... Maybe I'll crack it one day.
Will Critchlow
Will Critchlow
Dec 4, 2024, 10:30 AM
(We are increasingly viewing winning tests as uplifts that depreciate as competitors copy and google evolves and the market shifts)
Callie Scott
Callie Scott
Dec 4, 2024, 10:30 AM
I would be so interested in reading that Will!
Will Critchlow
Will Critchlow
Dec 4, 2024, 10:32 AM
Harangue me until I get it finished ????
Edward Bate
Edward Bate
Dec 4, 2024, 7:53 PM
Thank you all for the input - agreed @Jared McKiernan have seen 'blended CAC' a bit more than it deserves to be!
@Will Critchlow if you can get the accountants to treat the expense a different way I'm all ears!

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