Conversion Rates & The Value Of Outsourcing SEM/SEO

I recently got my hands on Marketing Sherpa’s newly released Landing Page Handbook. This detailed guide is packed full of industry information and practical case studies.

One of the things that jumped out at me was a table of conversion rate averages for different marketing tactics. The survey data was drawn from over 5000 active online marketers in a variety of settings.

In-house managed PPC Search – 3.84%
Outsourced managed PPC Search – 5.40%
Difference: 40%

In-house Natural Search Optimization – 2.62%
Outsourced Natural Search Optimization – 4.76%
Difference: 80%

As you can see, the outsourced conversion rates are much higher. Before I go any further, I must admit that this is not a scientific sample, and that self-selecting biases of various kinds are bound to obscure these results. We are not given any breakdown by industry or company sizes, or other critical information. However, at a high level the data makes perfect sense, since agencies must perform better to justify their fees and keep their client’s loyalty and business.

Agencies that are specialists in a particular area see a wide cross-section of accounts and industries among their clients and should be able to do a better job. This is not a slam at their hard-working and capable in-house counterparts. It is an acknowledgment that our industry moves very fast, and unless you have a whole organization focused on keeping up with the changes, it is very difficult to stay up on the latest developments.

Marketing activities are the engine of growth for a company. They are not administrative cost centers. Many companies mistakenly try to save a little money by running their programs in-house. They do not realize the real cost is in the lost opportunities that they can not capitalize on. If your in-house program is profitable, that is not enough – you must consider the scale of your program and always question how much money you might be leaving on the table. Giant conversion rate differences such as the above can be turned into strategic weapons that let you soundly trounce your competition.

So next time you consider the in-source / outsource decision, consider opportunity as well as direct costs.

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