Pareto and Organic SEO: 80% of Your Visitors Come From Organic Clicks

Have you ever heard of the Pareto Principle? It’s a pretty common theory among the new wave of entrepreneurs that have spun off of the likes of Tim Ferris and T. Harv Ecker. It says, quite simple, that 80% of your X comes from 20% of your Y.

In other words, 80% of your profit comes from 20% of your customer base. Similarly, 80% of your problems come from 20% of your customer base — and it’s probably NOT the same 20%. This has led to, among other things, a sudden focus on reducing your customer base as a valid business strategy — just make sure you cut the customers that create problems, not the ones creating the profit.

In the world of SEO, this is also true on a large scale. It turns out that of all of the money spend on Search Engine Marketing each year, 80% of it is spent on pay-per-click marketing, and only 20% is spend on organic SEO. Conversely, of all of the traffic that flows through Google and it’s competitors, 80% of it is organic (i.e. it comes from the actual search results and not the PPC ‘sponsored placement’s.) The other 20% is pay-per-click traffic.

So, 80% of the money results in 20% of the traffic — and 20% of the money results in 80% of the traffic. By my math, that makes every dollar you spend on SEO some sixteen times more valuable than each dollar you spend on PPC. That isn’t to say that PPC doesn’t have it’s advantages — instant traffic is more useful in terms of cashflow than traffic that doesn’t come for a few weeks or even months down the road — but sixteen times? That kind of efficiency can buy a lot of patience.

Of course, there are options to dramatically improve the payoff of pay-per-click marketing. Many SEO companies are offering PPC management services that can quadruple the effect of PPC — so it’s only one-quarter as efficient as SEO. Still, unless you absolutely can’t wait for the traffic, SEO is probably your better option.