Search Marketing ROI and Recommended Spend for Small Businesses

Why Search Marketing is Essential for Local Businesses

Imagine you're a customer looking for a plumber, a cosy café, or a new accountant. What would you do? Most likely, you'll open Google and type in “plumber near me” or “best café in Sydney.” The reality is that search engines are now the primary way customers find and choose local businesses.

For SMB owners, this creates an incredible opportunity—but also a challenge. Search marketing, which includes Search Engine Optimisation (SEO) and Pay-Per-Click (PPC) ads, can be a game-changer for driving revenue. However, many businesses struggle to determine how much they should spend on these channels and what type of return on investment (ROI) to expect.

This guide is designed to simplify search marketing for small to medium-sized businesses (SMBs), with practical advice on how much to invest in SEO and PPC, what kind of ROI you can anticipate, and strategic tips for service businesses, restaurants, and cafés.

The Digital Marketing Landscape

How Does Search Marketing Fit in?

Digital marketing comes in many shapes and sizes—from email campaigns and social media to video content and influencer marketing. Each channel offers unique benefits, but search marketing is arguably the most impactful for local businesses.

Here’s why search marketing stands out:

• High Intent: Customers actively searching for specific keywords often have a high intent to purchase or engage.

• Measurable ROI: SEO and PPC offer clear insights into cost, traffic, and conversion data, making it easier to track performance.

• Dominance of Search: Organic search drives over 50% of website traffic, and paid search accounts for 27%.

Benchmarks for Digital Marketing Budgets

Allocating the right budget is critical. A typical SMB spends 7-15% of annual revenue on marketing, with 45-70% of that marketing budget going to digital channels. For search-specific spending, setting aside 20-30% of your digital budget is a strong starting point.

For example, if you're a local café making $600,000 in annual revenue, your total marketing spend might range from $42,000 to $90,000, with $18,900 to $42,000 allocated to SEO and PPC.

ROI Expectations By Channel

• SEO: $22 for every $1 spent (average ROI). A long-term investment with strong compounding returns.

• PPC: $2 for every $1 spent (200% ROI). Immediate visibility but ongoing costs.

• Email Marketing: Often the highest ROI ($36-$42 per $1 spent). Ideal for nurturing repeat customers.

Zooming in on SEO and PPC

Why Invest in SEO?

SEO focuses on earning organic visibility in search results, making it a long-term marketing strategy with compounding benefits.

• Cost: SMBs typically spend $500–$7,500/month on SEO services, including content creation, keyword optimisation, and link-building.

• ROI: Averages around 2200%, though results may take 6–12 months to materialise.

• Lead Quality: Leads from organic search convert at an impressive rate of 14.6%.

Why Invest in PPC?

PPC gives you immediate visibility by bidding for ad placements on search engines like Google.

• Cost: Average cost-per-click (CPC) sits around $4.66, with cost-per-lead (CPL) ranging from $29 to $66 depending on your industry.

• ROI: Benchmarks often show 200% ROI, translating to $2 revenue for every $1 spent.

• Speed: Unlike SEO, PPC delivers results almost instantly, making it great for time-sensitive campaigns.

The Balanced Approach

Combining SEO and PPC allows you to reap both short-term and long-term benefits. Start with a flexible split, such as 50/50, and adjust based on data. For example:

• If you’re seeing more ROI from SEO, gradually shift more funds there.

• If you need quick leads to meet business goals, PPC can help plug the gap.

For most SMBs, dedicating 20-30% of your total digital spend to search marketing is a good rule of thumb—with flexibility based on performance data.

Sector-Specific Recommendations

Service Businesses (Plumbing, Legal, Accounting, etc.)

• Marketing Spend: Allocate 8-12% of revenue for home services like plumbing or HVAC. Professional services like accountants or lawyers might spend 4-8%.

• SEO ROI: SEO offers long-lasting returns, with legal firms averaging $6 earned for every $1 spent on SEO. Expect a break-even period of 6–14 months.

• PPC Benchmarks: Legal services face high costs at $8.94 CPC and $144 CPL, while home services like HVAC sit lower at $6.96 CPC.

Example for an HVAC Business: If you invest $3,000/month in SEO and $3,000/month in PPC, expect a 6–9-month timeline for SEO to start showing ROI. PPC, meanwhile, will likely generate immediate enquiries.

Restaurants and Cafés

Local searches like "restaurants near me" heavily influence dining choices.

• Marketing Spend: 10–15% of revenue is the sweet spot for restaurants and cafés.

• SEO Importance: Optimise your Google Business Profile and encourage customer reviews for local SEO. Case studies show cafes boosting revenue by 20% via SEO efforts.

• PPC Performance: Low CPCs of $2.18 make PPC ads on Google and Facebook cost-effective.

Pro Tip: Pair PPC with local SEO to ensure high-intent customers find and choose your venue. Highlight your menu, hours, and photos to build trust.

Key Factors That Influence Success

Competition

More competition equals higher costs, especially in PPC where keyword bidding increases CPC. To stand out:

• Focus on niche keywords (e.g., "emergency plumber Sydney").

• Leverage seasonal opportunities (e.g., summer promotions for outdoor dining).

Location

Local SEO is critical for SMBs. Optimise your Google Business Profile, ensure your NAP (name, address, phone number) is consistent online, and generate positive reviews.

Seasonality

Seasonal demand greatly impacts budgets. HVAC companies, for example, should adjust spend during peak heating or cooling seasons. Similarly, cafés could benefit from promoting winter menus or summer cocktails.

Business Stage

Startups often need to invest more aggressively (15-30% of revenue) compared to mature businesses aiming for steady growth (5-10%).

Measuring Your ROI

Tracking search marketing success boils down to metrics.

Key Metrics to Measure

• ROI: [(Profit - Cost) / Cost] x 100%. Aim for at least 300% ROI.

• CAC (Customer Acquisition Cost): Total marketing spend divided by new customers. Keep this low while maximising CLV (Customer Lifetime Value).

• CLV (Customer Lifetime Value): Measure the profit each customer generates over time. Aim for an LTV:CAC ratio of 3:1.

• CPL (Cost Per Lead): A critical metric for service businesses, showing lead cost by channel (organic vs. paid).

Recommended Tools

• Google Analytics to track website traffic and conversions.

• Call Tracking Tools like CallRail for phone leads.

• POS Systems for restaurants to link offline sales to digital campaigns.

Consistent testing and optimisation are key. Experiment with ad copy, keywords, and landing pages to see what works best.

Actionable Insights for SMBs

Search marketing isn’t just a tactic; it’s a strategic investment for growth. Here's a quick summary of recommended benchmarks:

• Digital Marketing Spend: 45-70% of your total marketing budget.

• Search Allocation: 20-30% within your digital spend.

• SEO Results Timeline: 6-12 months for ROI; average ROAS of 9.1.

• PPC Results Timeline: Immediate, ROI often around 2.

By committing to both the art and science of search marketing, SMBs can position themselves for significant growth. Start tracking your metrics and refining your strategy today to unlock the full potential of search marketing.