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May 6, 2008

SEO is about to Grow Up

Those who have been in the industry since the late 90’s have seen huge changes in SEO. The industry has really matured. But in the grand scheme of things, if you were to plot SEO on a product life cycle chart you would see that the industry is still in its’ infancy.

Except that we’re poised for some serious growth.

SEO – Introduction Stage – Starting about 1998
Companies who were around in the introduction stage often had to build product awareness and develop a market for SEO.

In the early ‘2000’s, many of our clients had just build their first websites. This was a significant investment for them and they thought that now that they have a website, the online sales would just flow in. Many didn’t realize that they had just invested serious coin into an over-priced business card. Because nobody could find them.

At this point, there was little consistency in the product. And as the algorithm got more complex, the SEO offering varied more. Some companies were offering to “submit to hundreds of search engines” (some still are) whilst others were offering usability, analytics and site architectural input in addition to on-page and off-page SEO.

SEO – Early Growth Stage – we’re still just at the beginning of it.
In the early growth stage, smart SEO companies are beginning to think about building their brand and to increase market share.

Demand is increasing as more customers understand the benefits of “getting found”. There is some competition at this stage but because the market is broadening so much, competition is limited and there is still a huge amount of camaraderie within the industry.

10 years into it, it’s easy to assume that our industry is more mature than it actually is.

We’ve only just begun.

Customer Implication
Demand has already started to increase but it is going to skyrocket. And it’s going to come from all types of business from very small customers to Enterprise type of businesses.

Up until recently, the neighborhood dry cleaner didn’t care if someone across the country found their website because they deal within a 5 km radius got very little benefit from optimizing their website. Now as search gets much better at localization, those local business will become much more serious about the opportunities online

It is also likely that we’ll see a lot of growth from Enterprise clients. These clients previously resisted SEO due to the complexity of working within legacy back-end systems. As technology increases and back-end systems become less expensive for more capability, we’re going to see companies replace their antiquated CMS’s with SEO friendly options.

Another change that this stage of the product life cycle will bring is in our relationship with the client. As SEO becomes a bigger part of the mainstream marketing mix, our customers will become more and more knowledgeable about SEO (we’re already starting to see this).

We’ll move from having a sales / consultative role to being a thought partner. Our clients will have a good understanding of what needs to be done but they’ll outsource it to us because we’re more efficient at implementing.

Competition Implication
With high growth in revenues, low barriers to entry, and no certification required, the SEO industry is prime for attracting any and all new entrants.

There have always been new competitors. But the face of our competition is going to change greatly. Up until now competition has focused primarily on small start ups and web design firms who decide to add a search component. Some stick around but many are wiped out with the next major shift in the algorithm.

This phase of the SEO life cycle is going to attract better capitalized, stronger competition from many sectors. These new entrants are attracted to SEO by the potential for profits not by the fit with their offering.

We are already starting to see traditional media firms seek to protect their eroding revenues by grabbing a slice of the online pie. But WalMart has shown us that future competition could be anyone. And it will be.

No all new entrants are attracted by dollar signs. There are also companies that are feeling increased pressure to offer a more well rounded package. As the integration of offline and online marketing services increases, customers are putting more pressure on agencies to handle the full scope of their marketing spend including the online component.

Although we’re already starting to see increased competition, many existing SEO companies aren’t feeling the pinch yet because demand is also increasing.

One implication of increased demand coupled with new entrants to the market is the impact on supply. We’re starting to experience a shortage of experienced SEO talent

SEO talent is a scarce resources. And this scared resource is not yet being renewed at a fast enough pace. Whilst some colleges are starting to offer digital media / internet marketing diploma, these grads know very little about what it takes to optimize a website.

Moreover, what they do know is limited to theory. It’s one thing to know that links are important to ranking. Its an entirely different thing to know how to effectively build links.

So what?

Who cares where we are in the product life cycle?

Although we’ve already experienced a lot of growth, this growth is nothing compared to what we’re about to experience.

In this next stage of the SEO life cycle, we’re going to see shifts in our clients, competition and product offering. Knowing that this is coming, will allow you to prepare.

If we know that face of our competition is going to change from other small to mid sized SEO’s to large Agencies and Enterprise size companies in totally unrelated industries then we can prepare for this by determining how we’re going to differentiate ourselves from the new entrants.

And if we know that there is going to be increased pressure on skilled resources then we should be developing in house training programs now.

The future is now. And it’s only just begun.