Why SEO is so popular right now
The demand for SEO is at an all-time high for many reasons. In this article, I explain why
When I started in SEO it was a very hacky discipline. A dark art. Then, it became more accessible. Today, 11 years later, the popularity of SEO has reached new heights.
There are more SEO specialists and they are in higher demand than ever before. More companies invest large sums of money in SEO, and the SEO community itself has become more vibrant and active than ever. More Reddit users are interested in SEO.
Why is SEO so popular right now, though? The answer, as so often, is multifactorial. There is more than one reason.
#1 Tech companies are more successful
Most Fortune 500 companies leverage SEO because a higher share of the F500 consists of tech companies. Companies like Apple, Walmart, Amazon, and CVS drive a lot of business through SEO. For some businesses SEO is vital.
To stress the point, let’s look at the top companies of the world, the Fortune 10, over the last 20 years (companies that leverage SEO in bold):
As you can see, the amount of tech companies in the F10, and F500 for that matter, is growing. This is one reason for higher investments and competition in organic search.
#2 Saas is exploding
Not only are more top companies leaning on SEO, but SaaS has also been exploding since 2011. That might have an even larger impact on the popularity of SEO than the top companies in the world.
In the last 10 years, the number of SaaS businesses has grown from 150 to over 8,000 - +5,000%! [1]
A lot of SaaS companies invest heavily in SEO, either earlier if SEO is part of their core growth loop or later if SEO provides incremental gains.
#3 Ecommerce is through the roof
The explosion of e-commerce is parallel to SaaS. SEO is key for e-commerce aggregators and incremental for DTC companies. [2]
Since 2016, the number of small businesses making over $100,000 on Amazon has increased 2.5x! Now, businesses selling on Amazon tend to not worry about SEO much because Amazon does that for them, but it shows that not only GMV and sales are growing, but also the number of e-commerce businesses. [3]
SaaS, marketplaces and e-commerce drive most SEO demand. What about affiliate? That business model is getting harder as a) few large players like Red Ventures or Dot Dash take more market share, b) affiliate fees are shrinking, and c) Google is rolling out more constraints like the recent product review update for affiliates. [4, 5]
#4 Ads are getting less efficient
Another reason for the popularity of SEO is decreasing ad efficiency, the result of price and inventory. The reasons ad prices are going up and inventory down are multifold.
First, the increase in tech companies, SaaS, and e-commerce drives prices up and inventory down. There are only so many top spots on Google to show ads, people to target on Facebook/Instagram, or videos to watch on Youtube.
Second, increasing privacy needs and updates reduce targeting effectiveness. Facebook recently published quarterly earnings that show a $10b hole in their profit due to ATT (Apple Tracking Transparency). At the same time, Google reported strong gains, which came in large part from retail/e-commerce. Facebook's losses are Google's gains. Google doesn’t face the same starting problem because search queries inherently reveal intent, decreasing the need for tracking and profiling. [6, 7]
Third, Amazon ad revenue grew to $10b in Q4 2021. It's likely that this growth comes at least in part at the cost of Google and Facebook beacuse E-commerce businesses are very lucrative to ad platforms due to the faster conversion cycle compared to saas/enterprise (Amazon itself is one of the largest Google Ads spenders). As Amazon cuts out the middleman by providing direct ways to advertise on a platform that's focused on buying, ads on Google and Facebook might be getting more expensive. [8]
Fourth, ad inventory is naturally limited by user experience. In a search system, ads correlate with lower quality results because by definition they’re paid for. That stands at odds with results that are algorithmically determined by engagement or demand. Too many ads kill good user experience, so a balance has to be found.
Ultimately, this leads to more competition over ad inventory and higher prices per ad on Google and Facebook. Since budgets are zero-sum and as ads are getting more expensive, it’s logical to invest more in low-cost channels like SEO, which drives competition.
#5 SEO is “technically free” but not really
The last driver behind SEO’s popularity is that SEO is more cost-efficient than advertising or other means of user acquisition. Many people would say that SEO is free but what they mean is that SEO has no direct operational expenditures. The indirect cost for SEO is the salaries, tools, and services, whereas paid channels need all the above plus the capital to run the ads.
That gives many leaders the perception that SEO is a free channel they can tap into, even though it’s not free. SEO is certainly low cost with sustainability and scalability.
This notion exists in part because of the complexity of SEO. Only few people understand how to run and scale the channel beyond basics. It’s a Black Box for outsiders, which can be a moat for businesses at the same time.
#6 The pandemic drives cost-cutting
When economic challenges arise, companies tend to cut costs. The covid induced pandemic and resulting recession decreased many companies' profit margins, which led to reduced expenditures. SEO is a more affordable channel and therefore, more popular in harder times.
Summary
To summarize, the factors driving SEO's all-time high popularity right now:
- More advertisers on the market
- Impaired ad targeting
- Ad platform competition
- Shrinking ROAS
- SEO’s scalability
- SEO’s Black Box factor
- Lower cost of SEO
Will the trend remain? To be seen! SEO is becoming more complex and harder to influence. I could see the demand for SEO dropping if a new platform comes on the scene that pulls a lot of consumers and allows companies to run ads at lower cost.