Why Most SEO Firms Will Let ROI Wither and Die

on under Search Engine Optimization.

wasted timeYou and I both know it's a problem with the industry.

Done right, SEO offers some of the highest returns you can possibly expect, because the value is cumulative. Every hour you put in now will offer something in return for years to come.

But SEOs have trouble with reporting ROI and, in general, they have trouble maintaining it over the long term.

You probably think the problem is difficulty measuring ROI, and there's certainly some truth to that.

But in reality, there's more going on here.

It's a fundamental problem with the standard approach, and it needs to be fixed. So let's talk about how to do that, right now.

The Principle of Diminishing Returns

At it's core, the principle (or law, if you prefer) or diminishing returns is actually pretty straightforward.

It says that anytime you do something productive, if you increase the amount of time or resources you put into it, then at some point that extra work isn't going to offer as much value as it used to.

With something a bit more traditional, like advertising, diminishing returns are kind of straightforward. You show an advertisement to a group of people, and a certain percentage of them will buy something.

Then, as you dial up the number of people you show the ad to, a smaller percentage of those people are going to end up buying.

But, speaking generally, if you keep showing the ad to the same number of people, you can expect the same percentage of them to keep buying.

And because of its nature, SEO doesn't work that way.

Why Diminishing Returns Work Differently for SEO

Here's the thing. Because of its cumulative nature, SEO actually lends itself to this problem sooner than a lot of other types of marketing.

Here's why.

If you build 10 links to a page, that value doesn't just disappear next month. It places you ahead of anybody with 10 links of equivalent quality to a similar page from now until the end of Google (to oversimplify things just a bit).

At some point, for any keyword phrase, there is some magic number of backlinks with a certain level of quality where you will rank at the top of Google. From that point forward, the marginal ROI of link building is zero (or less, at least for that keyword).

(Again, yes, I'm oversimplifying a lot here, since your competitors are likely to keep building links to try and pass you.)

This is a major problem for SEO firms that charge based on things like:

  • Hourly rates
  • Retainers
  • Pre-defined repetitive projects

Most SEO tactics work this way, not just link building.

Past a certain point, there just aren't any more worthwhile keywords in your niche, and you need to start considering new niches, rather than just endlessly recombining variations of existing keywords.

Once you've built a certain number of links, you're going to benefit yourself a great deal more if you start focussing on all the keywords you could potentially rank for right now, instead of building more links.

There's only so many on-site changes you can make before the pages themselves are "perfectly" optimized for search engines (and users, of course).

If you're doing the same thing, month in and month out, you're going to start running into diminishing returns pretty rapidly.

This is not a criticism of SEO. In fact, it's a major compliment.

SEO tactics are more valuable precisely because they reach the point of diminishing returns more quickly than traditional marketing tactics.

It's just important to recognize that if your SEO firm isn't taking things on a case-by-case basis, this is going to be a problem.

You will be missing out on opportunities.

Image credit: JD Baskin

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