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Are you Investing in SEO the Warren Buffett Way?

An SEO, one of the most common questions 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.

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.

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.

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.

Source: Investing in SEO the Warren Buffett Way

Manny Luna


VL Digital Marketing

Views: 458

Tags: SEO, advertising, blogging, cost, engine, maketing, media, optimization, search, traditional


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Comment by Alexander Lau on September 3, 2014 at 7:20am

Just because you rank DOES NOT mean you will convert.

I've had keywords rank extremely high, with hundreds of thousands of search traffic and they convert like crap. Yes, it's important to rank, but you had better have your site fully developed for conversions. 

Bottomline, if you give up on SEO, you're going to fail, regardless of what Google's newest changes might be. It's about the long haul.

Comment by Larry Vestal on September 1, 2014 at 7:51am

While I agree, it may take time to rank, especially for keywords that have any real value, dealers want to make sure that their SEO service is actually doing something for them.  There should be evidence of moving in the right direction over a period of specified time.  I've seen many companies paying for services and not getting much in return. Some are paying a high price for nothing.  It is amazing to me!  They also think that since they are using a well known company or larger company that this somehow gives them more of an advantage.  Not necessarily true.  Many times it just gives them more expense and less service.

Some companies think they are ranking on top because they do a search on their computer, which they have used to visit their own website many times.  They don't realize that this skews their results.  They need to clean their cookies and sign out of their gmail account to see where they really rank on Google.

Another thing that one might want to consider between PPC and SEO is that SEO can be considered an asset of the company while PPC cannot.  Websites that are optimized can be sold while PPC campaigns are pretty much history after you stop funding them.  I personally think a blend of the two can be very beneficial for increasing potential customers.

ROI can be difficult to measure, since SEO can bring you more potential customers but it will not sale the "dealership" to the customer.  I used the word dealership, because I believe with today's consumer you are selling more than just the automobile.  Thanks for the post and providing a different view on SEO.

Comment by Carl Maeda on August 30, 2014 at 11:15pm

Great lesson!  I agree, SEO is a long term strategy.  However, I'm curious, how do you know if the investment is paying off?

For me, I look at a couple (3 to 4) months worth of data at a minimum.  I then change the view from daily to weekly or monthly.  I then look at the general trend of organic traffic and the leads generated from that organic traffic.  I also look at the number of sales generated so I can compute the ROI. 

Comment by Mike Warwick on August 30, 2014 at 6:31pm

Great post Manny!  It's difficult for many in our business to understand that you need to have 90 day, 1 year and 5 year goals when it comes to SEO. We are so conditioned to run on this 30 day hamster wheel that it's difficult to develop and execute a strategy that can take years to fully evaluate the strategies effectiveness. Dealers who want to reap the benefits of a comprehensive SEO strategy need to take the long view. To stay with your stock market analogy, the market has a way of crushing the "day-traders" looking to make short term gains. Google does the same to short term SEO strategies that think they can "game" the algorithm. 

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