Investing in SEO the Warren Buffett Way

Investing in SEO the Warren Buffett Way

As an SEO, one of the most common questions I get from potential clients goes something like this: “If we target keywords X, Y and Z, what kind of return can we expect on our investment? We need to know the potential ROI before we invest.”

Did you catch that? The keys to that question are the words investment and invest.

I’m a numbers guy, and one of my hobbies for quite a few years has been paper trading. I do some research, pick a handful of stocks to virtually buy, and watch their performance over the course of a few years, until I decide it’s a good time to virtually sell.

The stock market fascinates me, and I’ve found that SEO is exactly like the stock market.

You do your research to identify which keywords you feel will perform well in terms of both traffic and conversions, and that provide a good balance between risk and reward, and then you target those keywords. Just like picking stocks.

Most investors have their own unique approach to picking their stocks (just like keyword research), and some even have their own algorithms to aid in selecting what to invest in and when.

If you pick a bad set of stocks, you might lose money. If you sell the stocks too late, you might lose money. If you sell too early, you might lose money or even leave money on the table. You have to pick good stocks and hold them for just the right amount of time, just as you have to pick the right keywords and target them for the right amount of time.

In going through this process I’ve learned a lot of lessons, but one of the most important lessons that I’ve learned is this: Picking good stocks (or keywords) typically isn’t the hard part…being patient enough to hold on to them for the long-term, through the periodic ups and downs in the market (rankings) is the hard part.

In the world of SEO, rankings fluctuate all the time. Dr. Pete Meyers, a cognitive psychologist and an expert when it comes to analyzing search engine performance, recently wrote a great blog post about search engine ranking fluctuations. While I highly recommend reading the post, the TL;DR version is that 80.2% of SERPs (search engine result pages) change every single day, much like the stock market.

SERP Fluctuations

From a blog post on SEOmoz by Dr. Peter J. Meyers

Because change is the only constant in our world, you simply can’t look at SEO or investing through a micro lens.

Thorough research, patience and a long-term investment mentality are the keys to building vast wealth, which is why investors like Warren Buffett have been so incredibly successful. He doesn’t think monthly, quarterly or even yearly. He invests 5, 10, perhaps even 20+ years out.

This is the key not only for investing and growing wealth, but for SEO. You simply can’t approach SEO with a short-term investment mentality. If you’re looking for a quick hold-and-flip, that isn’t SEO. If you want to know with some measure of statistical certainty what your ROI will be over the next quarter or year, that isn’t SEO.

If on the other hand you’re willing to invest for the long-term, if you have a long-term vision and you’re willing to do whatever it takes to reach your end goal…that’s SEO.

SEO is a long-term investment, and can sometimes take years to really pay dividends. At the same time, it isn’t really optional. Of all the people who search for something on search engines, 82% of those searchers will end up clicking on an organic listing.

SERP CTR Rates PPC vs. Organic

From a Presentation by Rand Fishkin, CEO of SEOmoz

While PPC is much more granular and seemingly less risky (if done correctly), it’s also a vastly smaller slice of the pie. Because you can only own one paid ad slot at a time, the best CTR you can really hope for on any given search result page is maybe 7-8%, and you might be paying a pretty penny for that traffic.

With SEO, a top ranking position could potentially be good for a CTR of 40-60%, perhaps even more. Organic traffic can potentially deliver 5-10x more traffic than PPC…but not instantly, and not easily. SEO is not a “put money in and immediately get money out with a multiplier” type of scenario.

Perhaps it would help to think of SEO less as a form of marketing, and more like branding (a much better analogy). Just like with building a brand, an investment made in SEO will need to be amortized over time.

Warren Buffett SEO Investment

So the lesson to be learned is this: Invest for the long-term. If you’re going to invest in SEO, it’s important to make that investment knowing that you may or may not see a positive ROI in the first 3, 6 or even 12 months…and that’s OK, because it’s a long-term investment.

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Comments (8)

  • Jon Lisbin Reply

    Good thoughts about SEO strategy Sam. Long term thinking is where it is at. Can we being this to Washington?

    January 6, 2013 at 7:01 am
    • Sam McRoberts Reply

      The challenge is that too many people have come to view SEO as a form of marketing…and while it is in a way, it has more in common with branding than it does traditional marketing at this point. Great brands don’t become great overnight, they’re built over the course of years.

      With all of the changes that Google has made and will continue to make, if you don’t approach SEO with a long-term mentality you could do far more harm than good. Short term thinking is dangerous.

      I think it will be a challenge to help clients to understand this and to invest accordingly, without knowing exactly when or even if the efforts will bear fruit (no matter how well you do, if 7-10 other people are doing it better, or with much bigger budgets, you might never crack the first page).

      March 5, 2013 at 11:56 am
  • Seb Atkinson Reply

    Great article. Clients need to know that SEO will reap huge rewards, but it takes time to get the momentum going. It is our responsibility as SEOs to educate them.

    In some ways the quick fixes and quick results promised by cowboy agencies, who fail to deliver these promises, have a negative impact on the industry as they fuel the false notion that SEO can deliver instant results, which hurts respectable agencies that aim to deliver what’s best for their clients: sustainable long term results.

    October 17, 2013 at 6:32 am
  • Jonathan Keller Reply

    Great Article Sam.

    I was directed here from a Forbes article by Jayson DeMers “Is SEO Dead” where you had an interview with him.

    My take away from this and the other article is relate SEO to branding.

    December 15, 2013 at 7:52 pm
    • Jose Fuentes Reply

      Yes, I was also being referred by Forbes. And, I just wanted to add that this marketing strat of being cited by great websites like Forbes will really get a lot of click throughs since authority websites certainly don’t post a joke content.

      January 6, 2014 at 12:31 am
  • JR Griggs Reply

    Late to finding this post but glad I did. Good stuff.

    I feel your pain, lol. It’s hard to get clients to see that it takes time. They want results now and often don’t have the patience to let the work kick in.

    And many times they will pull the plug early and miss out on getting a return at all.

    December 30, 2013 at 7:10 pm
  • Jaakko suojanen Reply

    Interesting aticle. Iwas reading your interview too.

    With in 2 years the game has changed so much, if we dont change with it, we might as well quit. Rewards of good seo are great, but it really takes more time and resources to get them.

    February 19, 2014 at 4:37 am
    • krmcreative Reply

      Great analogy, an inspiring article and I can relate to the growth of a brand, something we engage in frequently. You’ve given me a new way of looking at SEO and the inspiration to think ahead of terms that will be relevant to my sector – thanks Sam! Keep up the great work :)

      K

      March 31, 2014 at 1:28 pm

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