A common problem top growth stage startup leaders know is choosing the right growth channel.
This can push them to either invest in many channels at once but not go deep enough in any one.
Or they often go deep into performance marketing since it offers predictability and the ROI that they want, fast.
Even if the ROI is highly volatile.
This article helps understand the economics of 3 popular, scalable growth channels –
- Traditional SEO
- Product led SEO
- Performance Marketing
Most businesses need only 1 growth lane to succeed.
But it’s better to know when to layer more growth lanes on top. This reduces risk.
The Fundamentals
Linear SEO
Traditionally SEO is Linear.
It focuses on gradual, incremental gains in online visibility, traffic, and conversions.
It involves a consistent investment in creating long form content, backlinks, and optimizing website.
It works best for industries and businesses where customers are aware of what they need, and have a strong “search” intent.
Businesses with long purchase cycles OR industries where trust and authority are critical to decision making align well with linear SEO.
Performance Marketing
Performance Marketing involves online marketing and running ads on publisher websites.
Usually with ad platforms like Google Ads or Meta.
Compared to Linear SEO, faster changes to growth strategy are possible. The feedback, and results are quick and measurable.
Customers not aware of your business offerings, can be convinced into buying your products & services. “Discovery” intent platforms like Meta help.
Best for industries where quick sales are the norm. Or the decisions don’t require high involvement.
Product led SEO
Product-Led SEO focuses on creating valuable products or tools programmatically.
Products that fulfil user’s search intent at scale.
This also includes acquiring high quality backlinks non-linearly.
The intent of customers here is similar to linear SEO, but the way to serve content and business offerings is a lot more scalable.
It’s best for businesses where quick sales are the norm, but user has “search” intent and awareness of what they need.
You can read how Groww dethroned Zerodha in this SEO Case Study on Groww.
Core Metrics
We can compare these growth channels on these core metrics over time:
Cost
It’s better to include not just marketing spends, but also salaries and other resources.
If your startup is in a resource constrained environment, it’s best to adjust this metric and revisit frequently.
Traffic & Sales
Conversion funnels from impressions to visitors to sales can be wildly different for different channels.
For this analysis, we’ll consider sales as the goal of these growth channels. (even if some marketers believe their job ends after bringing in quality traffic).
Profit
The emphasis on profits in this article’s analysis is short term – ROI accountability the same month.
Whereas in your business, it is on sustainable profitability, considering customer lifetime value and not just immediate gains.
This is why growth channel layering is important.
ROI
ROI in the context of this article is calculated on profit i.e. Profit / Cost.
While ROI is universally important, its interpretation can vary in a high-growth or startup context.
Immediate ROI is often less of a concern than long-term, scalable ROI.
The focus is on “smart growth,” which balances speed and efficiency.
But practically, for 90%+ growth leaders it’s hard to think beyond a few months.
But for good reasons. The startup may not be in a great position in 1-2 years.
Risk
Risk is associated with volatility and uncertainty.
For high growth startups, risk is also measured through the trajectory of growth.
It’s not just about avoiding negative outcomes but also about the opportunity cost of missing out on aggressive growth strategies.
So a higher risk might be acceptable if it aligns with a more ambitious growth trajectory.
Comparative Analysis
For a fair comparison, we look at a timeline of around 15 months, and divide it into 3 phases: First 4 months, next 6 months and 10 months onwards.
Linear SEO
Phase 1: First 4 months
Initially, you start with a simple investment either through an agency or a small team in house. You understand that SEO takes time to deliver so you give the team 3 months to build momentum and mentally prepare yourself for 6 months.
6 months later, some of your content is ranking, but in terms of sales, it’s crickets chirping. The agency continues to either ask for more resources e.g. budgets for link building, and more content writers or blames that the tech team hasn’t delivered.
The economics definitely doesn’t seem to be working out. So you bring in a new agency that promises you the moon at a lower cost.
Phase 2: Month 5 & onwards
6-9 months later, there has been a lot of work but you still can’t call SEO a growth channel that has delivered.
At this point, you usually either think of giving up on SEO, or try to reduce the burn by keeping a low cost agency that never has the intent of making SEO a profitable growth channel.
Performance Marketing
Phase 1: First 4 months
You experimented correctly by fast iterations, and set up the fundamentals right. The fast feedback loop is thrilling and you want to double your spends every month. It looks like performance marketing the best growth channel and you will be able to scale your business well.
Phase 2: Months 5-10
Reality starts to sink in – while the ROI is still better than any other channel, each incremental sale is happening at a higher cost. As the economics of scale battles the economics of ad platforms, you are feeling the risk increase along with the volatility of ad platforms.
While you are able to maintain MoM sales growth by investing more in performance marketing, the ROI is on a downward trajectory. This is where it feels SEO needs to save the day by decreasing the blended CAC and boosting overall ROI.
Phase 2: Month 11 onwards
At this point, you are starting to question the high hopes you had from performance marketing. This is usually when you’ve started investing in SEO, but the results might not kick in for another 12-18 months, and you need results now.
Product led SEO
Phase 1: First 4 months
In phase 1, product led SEO seems interesting in theory but similar to linear SEO practically. The initial investment is similar, and Google algorithm is taking its sweet time to crawl your website.
But by the end of phase 1, you see impressions rise dramatically. Yes impressions are a vanity metric when thinking sales and profit but at least the trajectory is sharp, and the roadmap is logical.
Phase 2: Months 5-10
The CTRs and rankings are bad but there are first signs of some meaningful traffic. The interesting part is that the team is delivering really fast as all the templates for programmatic SEO are already in place.
Out of the 3-5 programmatic tools shipped, the top 2 are growing fast. New possibilities are opening up in how you intend to convert the incoming traffic into sales.
This is when you know whether the product led SEO bet is likely to pay off with your current setup or not. Because it only required 1 growth marketer and 1 engineer, the cost didn’t increase over time.
Phase 2: Month 11 onwards
This phase is when you get to take bigger bets. If the strategy and execution has been right till now, you should be able to increase spends on other pillars of SEO that would support Product led SEO.
Since the mass personalised content produced at scale in low cost is bringing in sales already, it’s an easy call to reinvest the profits into growth supported by link building and long form content.
Your Product led SEO stategy can now transform into full stack SEO – and you can now profitably spend to rank on extremely competitive keywords that are close your heart and your business.
Prioritization between Linear and Product led SEO
Take the example of an HR Tech SaaS business.
If their primary focus is acquiring recruiters, they think of their customers on 2 axis. The customer persona, and their search behavior.
The above 2×2 matrix helps prioritise keyword themes basis “Buying intent” and “Search Volume”. Everyone wants to target high search volume and high buying intent (Quadrant #1), but it’s usually hard and time consuming to target such topics with linear SEO.
Product led SEO, if done right, significantly reduces time lag from keyword research to paying customers.
To summarize the matrix:
- High Intent + High Search volume
- Best for PLSEO and Conversion
- Couple with Linkedin/Google retargeting ads for low cost acquisition
- Theme examples
- {{competitor portal}} customer care number, {{competitor portal}} login
- tech recruiter interview questions
- High Intent + Low Search volume
- Best for long form SEO and conversion to paying customers
- best recruitment software 2024, it staffing agencies, tech recruitment companies
- freelance recruitment platform, recruit remote software developers
- Best for long form SEO and conversion to paying customers
- Lower Intent + High Search volume
- Good for PLSEO, right audience, but may not be buyers right now
- {{company}} hrms
- {{company}} payroll software
- {{hr policy}} template
- Good for PLSEO, right audience, but may not be buyers right now
- Lower Intent + Low Search volume = Ignore
What does that mean?
Investors and Owners want to know that you know how to turn their money into more money. Demonstrating validation of a scalable customer acquisition lane is one of the most important components of making your case.
– From Picking the right lane for customer acquisition by Dan Hockenmaier and Lenny Rachitsky
Below are some questions to help you figure out if Product led SEO is the right growth lane for you to focus on. The more you answer “Yes”, the better fit Product led SEO would be.
- Does your business have a runway of 2+ years to see the growth channel through?
- Do your customers have a strong search intent before purchase?
- Have you previously experimented with Linear SEO, but didn’t get meaningful results?
- Is tech a core advantage in your business i.e. have you already invested heavily in an engineering team?
If you answer “Don’t know” to any, we should get in touch figure these out together.
Sounds interesting?
You can look at it in many ways, but at the 8-12 months mark is where the magic starts to happen –
Hope this gave you an insight into the Economics of Product led SEO vs Performance Marketing.
Before You Go
Picking the right growth channel can make or break your business, but make sure you don’t get stuck in analysis paralysis. Strike the right balance of building and learning to make meaningful strides in getting results.
I’m still learning daily, and I certainly don’t know everything. But I can give you my perspective on any questions you have.
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