Framework to Think about SaaS SEO Budgets & How to Generate Profitable Traffic

Are you a SaaS company looking to grow your client acquisition and increase brand awareness? If so, you’ve probably considered investing in various marketing channels. But which ones actually deliver consistent returns? And how can you justify investing in SEO specifically? Well, I’ve got some answers for you.

So, if you’re ready to take your SaaS company to the next level and scale your client acquisition and brand awareness, keep reading. I’ve got the insights and proof you’ve been looking for, and a framework to help you think about saas seo budgets. Let’s dive in!

What Marketing Channels Can a SaaS Company Invest In & How To Compare Channels

When it comes to marketing channels for SaaS companies, there are a few key players that consistently deliver results. By investing in the right marketing channels, SaaS companies can effectively reach their target audience, generate leads, and ultimately drive growth. In this section, we’ll take a closer look at some of the top marketing channels and the benefits they offer.

Content Marketing: Content marketing plays a crucial role in the success of SaaS companies. By creating valuable and informative content, companies can establish themselves as thought leaders in their industry and build trust with potential customers. Content marketing includes blog posts, whitepapers, case studies, and ebooks, which are all designed to provide value to the audience and address their pain points. By consistently producing high-quality content, SaaS companies can attract organic traffic, generate leads, and nurture them throughout the buyer’s journey.

Search Engine Optimization (SEO): SEO is a long-term investment that helps SaaS companies increase their visibility in search engine results. By optimizing their website and content for relevant keywords, SaaS companies can improve their organic rankings and attract targeted traffic. The benefits of SEO for SaaS companies are not only limited to increased visibility and traffic but also include long-lasting results. Once a website ranks well in search engines, it can continue to attract organic traffic and generate leads without ongoing investment in paid advertising. However, it’s important to note that the SEO landscape is constantly evolving, and companies need to continuously invest in optimizing their website and staying up-to-date with the latest best practices.

Paid Advertising: Paid advertising, such as pay-per-click (PPC) campaigns, can provide SaaS companies with immediate visibility and results. With platforms like Google Ads and social media advertising, SaaS companies can target specific keywords, demographics, and interests to reach their ideal audience. Paid advertising offers the advantage of fast results and precise targeting, allowing companies to generate leads and conversions quickly. However, it’s important to note that paid advertising requires ongoing investment to maintain visibility and results. As soon as the ad budget is exhausted or paused, the visibility and lead generation also come to a halt.

Email Marketing: Email marketing continues to be a highly effective channel for SaaS companies. By building an email list of interested prospects and customers, companies can nurture leads, engage with their audience, and drive conversions. Email marketing allows SaaS companies to deliver personalized and targeted messages directly to their subscribers’ inboxes, increasing the chances of engagement and conversion. Additionally, email campaigns can be automated, saving time and resources while still delivering value to the audience. While email marketing does require ongoing investment in terms of content creation and list management, it offers the benefit of building a loyal customer base and generating recurring revenue.

Social Media Marketing: Social media platforms provide SaaS companies with an opportunity to engage with their audience, build brand awareness, and drive website traffic. By creating compelling content, running targeted ads, and actively participating in conversations, SaaS companies can leverage social media to attract new leads and nurture existing ones. Social media marketing offers the advantage of reaching a large audience and creating a sense of community around the brand. However, it requires ongoing investment in terms of content creation, engagement, and monitoring to consistently reap the rewards.

How SEO Provides Compounding Returns for SaaS Companies

Let’s start by understanding the concept of compounding returns. In simple terms, it means that the benefits you gain from an initial investment accumulate over time and continually grow. This is precisely what happens with SEO.

When you build a good SEO strategy and execute it properly, you start to see the initial results. Your website begins to rank higher in search engine results, driving more organic traffic. But the real magic happens when you keep nurturing and optimizing your SEO efforts.

For instance, by consistently creating high-quality content that aligns with user intent and incorporates relevant keywords, you can attract more targeted traffic to your site. This means more people who are actively seeking a solution like yours are finding their way to your doorstep (or rather, your website).

But here’s where the compounding returns come into play. As you continue to generate valuable content, attract more traffic, and provide a great user experience, search engines take notice. They start to see your website as a reliable source of information in your industry. Consequently, your website’s domain authority increases, which in turn leads to even higher rankings in search results.

To illustrate this point, let’s take a look at a real-world example. HubSpot, a leading SaaS company offering inbound marketing software, has seen remarkable results from their long-term investment in SEO. In a case study on their website, they highlight how Moz, an SEO software company, was able to achieve a 35% increase in organic traffic over a two-year period by implementing a comprehensive SEO strategy. We have personally seen our clients not only 2-3x their traffic but also grow their sales pipeline by 35%+ through leads generated from organic traffic.

The key takeaway here is that SEO is not a one-time effort. It’s an ongoing process that requires consistent attention and optimization. But the payoff is worth it. By continually building your online presence and improving your search rankings, you can enjoy compounding returns that result in a steady stream of organic traffic and, ultimately, more conversions and revenue for your SaaS company.

So, if you’re still on the fence about investing in SEO, let the proof in the market convince you. Take a cue from successful SaaS companies like Moz and HubSpot, and start building your SEO strategy today. Your future self (and your bottom line) will thank you.

How SaaS Companies Typically Figure out their Marketing Budget

When it comes to marketing budgets, it’s important to keep in mind that they can vary greatly depending on the size and stage of the company, as well as the industry they operate in. However, we can still draw some general conclusions based on available data.

According to a report by OpenView Partners, SaaS companies with less than $5 million in annual revenue typically allocate around 10-20% of their budget to marketing. This range seems to be the sweet spot for smaller SaaS startups that are still in the early stages of growth.

As companies scale and their revenue increases, their marketing budgets tend to follow suit. SaaS companies with annual revenues between $5 million and $20 million are likely to spend around 15-25% of their budget on marketing. This increase in marketing spend is usually driven by the need to attract and acquire new customers as the company expands.

For more established SaaS companies with annual revenues exceeding $20 million, marketing budgets typically fall within the range of 20-30%. At this stage, marketing becomes even more crucial for maintaining growth and staying ahead of the competition. Check out our guide on enterprise SaaS SEO to see what other criteria a larger, established SaaS company should consider.

It’s worth noting that these benchmarks are not set in stone, and each company’s situation is unique. Factors such as target market, customer acquisition costs, and competitive landscape can all influence the size of a SaaS company’s marketing budget.

While there is no one-size-fits-all answer to how much SaaS companies should spend on marketing, industry reports and statistics provide us with some benchmarks to work with. As a general rule of thumb, the percentage of revenue allocated to marketing tends to increase as companies grow and scale. However, it’s important for each company to assess its own needs and goals when determining the appropriate marketing budget.

Why SaaS Companies Need to Dedicate Resources to Marketing

To put this into perspective, let’s use a hypothetical example. Suppose a SaaS company generates $1 million in annual revenue. Based on the recommended range, they should spend between $100,000 and $200,000 on marketing activities. This budget can cover a range of marketing initiatives, including content creation, advertising, lead generation, and customer acquisition strategies.

Why dedicate such a significant portion of revenue to marketing? Well, the nature of the SaaS industry demands continuous customer acquisition and retention efforts. Competition is fierce, and staying top-of-mind with potential customers is crucial. Considering that the SaaS company model typically monetizes their clients for years, SaaS companies look at marketing as an investment. And markets where profit margins are higher (as in SaaS), the competition is typically fiercer, because there are new entrants entering the marketplace all the time.

But remember, blindly following a fixed percentage won’t guarantee success. It’s essential to regularly evaluate and adjust your marketing budget based on specific circumstances. For instance, if you’re a startup in the early stages, you might need to allocate a higher percentage to marketing to establish brand awareness and gain traction. On the other hand, a more mature SaaS company with an established customer base might allocate a smaller percentage but focus on retention strategies and upselling to existing customers.

How to Use Paid Search Efforts as a Benchmark for SEO ROI

It’s essential to have a clear understanding of the potential ROI before investing in SEO. Let’s break it down step by step.

First, let’s talk about available traffic per keyword. When running paid search campaigns, you have the ability to choose which keywords you want to target. This allows you to estimate the number of potential visitors your website can attract.

Next, let’s consider click-through rates (CTRs). CTRs indicate the percentage of people who click on your ad after seeing it. For paid search ads, the average CTR is around 2%. However, keep in mind that organic search results tend to have higher CTRs since they are perceived as more trustworthy and relevant to users’ search queries.

Now, let’s dive into the cost per click (CPC). The CPC refers to the amount you pay each time someone clicks on your ad. The cost can vary depending on factors like keyword competitiveness and industry. For instance, if you’re targeting highly competitive keywords in the software industry, the CPC could range from $2 to $10. In SEO, there is no SEO keyword cost (asides from the cost to create your content).

Moving on, conversion rate plays a vital role in evaluating the value of organic search traffic. The conversion rate measures the percentage of visitors who take a desired action. In this case, let’s assume the desired action is booking a demo. Typically, conversion rates for demo bookings range from 1% to 5%.

Finally, we arrive at the revenue percentage. This indicates the percentage of demo leads that convert into paying customers. Depending on your product and sales process, the percentage can vary. For example, let’s say 20% of demo leads convert into customers.

Now, let’s put these pieces together in a sample scenario. Suppose you run a paid search campaign targeting a high-value keyword in the software industry, generating 10,000 clicks to your website. Assuming a CPC of $5, the total cost of the ads would be $50,000 (10,000 clicks x $5 CPC).

Of those 10,000 visitors, let’s say 2% book a demo, resulting in 200 demo leads (10,000 visitors x 2% conversion rate). Out of those 200 leads, 20% convert into paying customers, giving you a total of 40 new customers (200 leads x 20% revenue percentage).

Now, let’s calculate the profit. If your SaaS product has an average customer lifetime value (LTV) of $2,000, your total revenue from these 40 new customers would be $80,000 (40 customers x $2,000 LTV). Subtracting the ad cost of $50,000, you would have a net profit of $30,000 in this example scenario.

This scenario demonstrates the value of organic search traffic compared to paid search. While paid search can generate immediate traffic, it can be costly. On the other hand, organic search traffic, although slower to build, can provide sustainable and cost-effective leads over time. That’s why investing in SEO is essential for a SaaS company to drive long-term growth. You’ll likely see similar client acquisition numbers, but the difference is that your efforts will provide compounding results (and lead flow won’t dry up if you pause SEO for a month).

I hope this breakdown helps you understand the value of organic search traffic and its comparison to paid search. By considering available traffic per keyword, CTRs, CPC, conversion rates, and revenue percentages, you can make informed decisions about your SEO investment.

How Much Would an In-House SaaS SEO Operation Cost?

While outsourcing SEO tasks to an agency is a common practice, having an internal team could provide you with more control and flexibility over your strategies. However, it’s essential to understand the costs associated with employing and guiding the necessary roles for a successful in-house SEO operation.

First and foremost, you’ll need an SEO strategist. This individual will be responsible for developing and implementing your SEO strategies, conducting keyword research, analyzing competitors, and staying updated with industry trends. The average salary for an SEO strategist can vary depending on factors such as experience level and location. On average, you can expect to pay anywhere from $50,000 to $90,000 per year for this role.

To create high-quality, SEO-optimized content, you’ll need talented content writers. These writers will craft engaging blog posts, website copy, and other content pieces that align with your SEO goals. The number of content writers required will depend on the scale of your content production. Generally, you can expect to pay around $40,000 to $70,000 per year for each content writer.

Backlink outreach is another crucial aspect of an effective SEO strategy. Building a network of high-quality backlinks from authoritative websites helps improve your search engine rankings. To handle this task, you’ll need a backlink outreach specialist. This person will be responsible for identifying potential link-building opportunities, conducting outreach, and managing relationships with other website owners. The average salary for a backlink outreach specialist can range from $40,000 to $70,000 per year.

Optionally, you may also consider hiring a technical SEO specialist (source: Search Engine Journal). This role focuses on optimizing technical aspects of your website, such as site speed, mobile-friendliness, and URL structure. A technical SEO specialist will also be responsible for conducting website audits and implementing technical SEO best practices. The average salary for a technical SEO specialist is similar to that of an SEO strategist, ranging from $50,000 to $90,000 per year.

In addition to the employee salaries, you should also consider the cost of necessary tools and software for your in-house SEO operation. These may include keyword research tools, analytics platforms, rank-tracking software, and outreach automation tools. Depending on the specific tools you choose, this cost can range anywhere from a few hundred dollars to a few thousand dollars per year. Check out our guide on SaaS SEO tools to get a more in-depth coverage of the various SaaS SEO tools you can explore.

Overall, running an in-house SEO operation for a SaaS company can be a significant investment. When considering the costs of employing an SEO strategist, content writers, backlink outreach specialists, and potentially technical SEO specialists, as well as the cost of necessary tools, you should budget a range of $200,000 to $400,000 per year.

While this may seem like a substantial investment, the long-term benefits of having an in-house SEO team can outweigh the costs. By increasing your organic traffic and improving your search engine rankings, you’ll be able to generate more leads, increase conversions, and ultimately grow your SaaS business.

Why Many SaaS Companies Work With SEO Agencies

When it comes to search engine optimization (SEO) for your SaaS company, you may be tempted to handle it in-house. After all, you have a team of talented individuals who understand your product and industry. However, hiring an SEO agency is often the more cost-effective and results-driven solution. Let me explain why.

Firstly, working with an SEO agency allows you to tap into a wealth of expertise and experience. These agencies specialize in SEO and have a team of professionals who are up-to-date with the latest trends, algorithms, and strategies. This means that they know exactly what works and what doesn’t when it comes to improving your website’s visibility on search engines. Their expertise can save your team countless hours of trial and error, resulting in faster and more effective results for your SaaS company.

Another advantage of using an SEO agency is access to advanced SEO tools and technologies. These agencies have invested in premium SEO tools and software that can provide valuable insights and data about your website’s performance, keyword rankings, and competitor analysis. By leveraging these tools, the agency can identify opportunities and make data-driven decisions to optimize your SaaS website. Purchasing these tools individually would be costly and time-consuming for your in-house team.

Additionally, an SEO agency brings a fresh perspective to your SaaS company’s SEO strategy. Being external to your organization, they can objectively analyze your website, identify areas for improvement, and develop tailored strategies to boost your search engine rankings. Their external input can provide valuable insights and innovative ideas that you may not have considered internally. This fresh perspective can lead to breakthroughs in your SEO efforts, driving more organic traffic and ultimately increasing your SaaS company’s revenue.

Lastly, let’s talk about the cost-effectiveness of hiring an SEO agency. While there is an investment involved in outsourcing your SEO, it is often more cost-effective in the long run (especially if you work with us). By working with an agency, you eliminate the need to hire and train an in-house SEO team, saving on recruitment costs, salaries, and benefits. Moreover, an SEO agency can deliver results more efficiently and effectively, leading to a higher return on investment for your SaaS company.

Red Flags to Look Out for When Evaluating an SEO Agency

SEO Agencies typically work with SaaS companies through monthly retainers (or seo monthly packages if you’re doing local SEO). The model is understandable, but the services that they provide for the price-point sometimes don’t make sense. Let’s dive in deeper so that you’re aware of potential red-flags.

So, what do these retainers usually entail? Well, typically, SEO agencies offer a range of services that are designed to improve your website’s visibility on search engines. These services may include keyword research, on-page optimization, technical audits, link building, content creation, and ongoing monitoring and reporting.

Some agencies offer different pricing tiers based on the number of targeted keywords and the size of your website. This is already a red flag, because your SEO success should not be based on the number of keywords you rank for, rather it should be based on how profitable your SEO operation is. Also, most agencies don’t place an emphasis on content creation. Content is the lifeblood of any successful SEO strategy, and without it, well, you might as well be throwing your money down the drain.

When you take a look at most agency pricing pages, you’ll see that their high-priced monthly retainer tiers include blog content, and even then, it’s limited to just four blog posts per month. Now, don’t get me wrong, consistency is important, but four blog posts per month simply won’t cut it in today’s content-saturated online world.

To put things into perspective, industry leaders recommend publishing fresh and high-quality content multiple times a week, if not more frequently. This not only helps you attract and engage your audience but also signals to search engines that your website is active and deserving of a higher ranking.

It’s important to carefully evaluate the pricing and the services included. In some cases, SEO agency pricing seems prohibitive (they’re taking advantage of SaaS companies), and it’s unlikely that they’ll deliver good results due to the lack of sufficient content or assurance of its quality. So, make sure to do your research and choose an agency that aligns with your goals and values.

What are Green Flags to Look For When Evaluating an SEO Agency

A good SEO agency understands the importance of crafting a comprehensive SEO strategy, which involves understanding your audience and what resonates with them. This means digging deep into your target market to identify their needs, interests, and pain points, and then tailoring your content to address those issues. Check out our guides on SaaS keyword research, SaaS SEO strategy, SaaS SEO roadmap, and B2B SaaS SEO to learn more.

Understanding your audience is just the beginning. A good SEO agency will also focus on off-page SEO, specifically backlinks and guest posts. Backlinks act as a vote of confidence from other websites, signaling to search engines that your site is reputable and authoritative. By acquiring high-quality backlinks from relevant and trustworthy sources, your website’s visibility and rankings can improve significantly. Check out our guide to off-page SEO for SaaS companies, and SaaS link building if you want to learn more.

But it’s not just about external factors – on-page SEO is equally important (check out our guide on on-page SEO for SaaS companies, and EAT SEO for SaaS if you want to learn more). Producing high-quality, relevant content is key to attracting and engaging your target audience. Some companies also use SaaS SEO agencies, SaaS SEO copywriters, and SaaS SEO consultants so that they can create engaging content, while optimizing for SEO. Great content not only keeps visitors on your site longer, but it also encourages them to share your content, driving even more traffic and potential customers your way. Additionally, a good SEO agency will emphasize the importance of an excellent internal linking architecture, which helps search engines understand the structure and hierarchy of your website.

Last but not least, a good SEO agency will focus on technical SEO. This involves optimizing the user experience (UX) and design of your website, ensuring that it is easy to navigate, loads quickly, and is mobile-friendly. A well-optimized page experience not only improves user satisfaction but also helps search engines understand and rank your website more effectively. Check out our guide on technical SEO for SaaS companies if you want to learn more

By covering these crucial areas, an agency can help your website rank higher, attract more traffic, and ultimately drive more organic conversions.

When to Increase Your SEO Budget

So, when should you start thinking about increasing your budget for SEO? Well, there are a couple of key indicators to look out for.

Firstly, if you’re starting to see leads and revenue come in, that’s a good sign. It means that your content is resonating with your target audience and people are willing to learn more about your offerings. This is the perfect time to double down on SEO and optimize your website for more targeted keywords related to your product or service.

Secondly, if there is a lot of opportunity to expand your SEO coverage, it’s a clear sign that you need to increase your budget. This could mean targeting new topics or audiences that you haven’t tapped into yet. For example, if you’re a project management software company, you could start creating content around specific industries or job roles that could benefit from your product. This will not only help you reach a wider audience but also establish your authority in the industry.

Lastly, if your LTV to CaC (Lifetime Value to Customer Acquisition Cost) ratio is more than 2:1, it’s a strong indication that you’re ready to aggressively expand your SEO operation. This means that the value you’re getting from each customer is significantly higher than what you’re spending to acquire them. In this case, it makes sense to allocate more resources to SEO because you know that the return on investment will be worth it.

You should also be able to proactively increase your SEO budget plan once. you start to see results. Using these parameters will help you capitalize on the momentum and continue to grow your business through SEO.

Why Your SEO Operation Should Be Profitable

First and foremost, a profitable SEO operation can significantly boost client acquisition. Secondly, Not considering the profitability of your SEO is one of the key SaaS SEO mistakes that your company can avoid. You can avoid this common SEO mistake, and other mistakes by using our 14-step expert level SaaS SEO checklist. When your website ranks higher in search engine results pages (SERPs), it becomes more visible to potential clients who are actively searching for the products or services you offer. According to a study conducted by Chitika, the first result on Google receives a whopping 32.5% of traffic, while the second result only gets 17.6%. This means that the higher your website ranks, the more likely you are to attract qualified leads and convert them into paying customers.

Additionally, an optimized SEO operation can enhance brand and market awareness. When your website appears on the first page of search results for relevant keywords, it not only increases your visibility but also establishes your brand as a reputable and authoritative source in your industry. This can lead to a positive perception of your company and make potential clients more inclined to choose your products or services over those of your competitors.

Furthermore, a profitable SEO operation can help your business scale in terms of both reach and revenue. With an effective SEO strategy in place, you can target specific keywords and long-tail phrases that align with your target audience’s search intent. By consistently optimizing your website and creating valuable content, you can capture more organic traffic and expand your customer base. As your business grows, so does your revenue, allowing you to reinvest in other marketing channels and accelerate your company’s overall growth.

By harnessing the power of SEO, you can attract more qualified leads, establish your brand as an authority, and drive revenue growth. So, if you haven’t already invested in SEO, it’s time to start optimizing your online presence and reaping the benefits it brings!

If you’re looking for an actionable, personalized guide on how to build a profitable SaaS SEO operation, feel free to request your action plan from our team! We help companies create profitable SEO operations that are designed to provide returns for years, if not decades!