The 5 Business Models of SEO – Pros & Cons, Discover the One For You

June 23, 2008 - Written by Gyutae Park  

5 business models of SEOSEO is a relatively new industry that has taken off with growing Internet usage and the surging popularity of search engines like Google and Yahoo. Businesses are realizing the potential of online search as a means for effective lead generation, and this has a created a huge demand for increased organic search rankings and thus search engine marketing services.

So how can a good SEO profit from all of this? What are our options? I see the following 5 business models for SEO:

  1. In-house SEO for a company
  2. SEO agency
  3. Independent SEO consultant
  4. SEO education
  5. Promoting your own online projects via SEO

All of these models are viable methods for SEO monetization and I’ve had a chance to experience all 5 in some shape or form. I’ve done in-house SEO work for one of the largest collectibles companies in the nation, worked as an SEO specialist for a top 10 search marketing agency, performed a few SEO campaigns for my own clients, written articles on the topic of SEO, and started up an online business using SEO as the primary means for promotion.

Each of the 5 different situations has its pros and cons and is ideal for a certain type of person. Which one do you prefer?

1. In-House SEO

Pros
The advantage of in-house SEO is that you are dedicated to a single business that already believes in the effectiveness of SEO (otherwise they wouldn’t have hired you, right?). This in itself goes a long way, as the support of the marketing and tech teams can make or break the success of a campaign. As an in-house SEO, you can fully familiarize yourself with the company you are working for and invest all of your resources into a comprehensive effort. Unlike agency SEO, there’s no need to upsell clients, deal with pricing, or work under strict timelines. You’re paid to do one thing and one thing only – increase rankings, traffic, and conversions on that website. Income is steady and risk is relatively low (as long as you provide value to the company). This is ideal for someone who enjoys the pace and the “security” of a full time corporate job.

Cons
Sure, a full-time job with a large company doing SEO might sound enticing, but there are a few disadvantages that you should know about. First, you’re optimizing just a few sites for the company directly. Because of this, you are limited in your SEO experiences and may become bored of the work very quickly. For example, how many times can you do keyword research for figurine collectibles before you tear your eyes out? Not fun if you ask me.

Also, since the skills of an SEO are very specialized, there is less room for upward mobility within the company. An SEO specialist will always be an SEO specialist.

Finally, what happens when a site is fully optimized and has high rankings for all competitive keywords? Although this is rarely the case, it is a possibility. An in-house SEO would easily become dispensable after too much success too fast – all without being fairly compensated for the huge returns the company gains. Overall, salaries for in-house SEOs are miniscule compared to the revenue potential.

Examples
Jordan Kasteler of Utah SEO – SEO Analyst at Overstock.com

2. SEO Agency

Pros
Working for an SEO agency is advantageous because you are surrounded by like-minded people who are passionate about the industry and are willing to invest in your development. There is a ton of team support and agency SEOs are known to be the thought leaders and experts in a fast-changing industry. An agency also allows you to focus on SEO work, play around in different industries, and develop new tools and processes to win clients and gain an advantage over the competition. There are various opportunities for upward mobility and the focus is really on SEO education, service, and development.

Cons
While an agency does provide excellent opportunities for SEO development, there are some disadvantages that may make it unappealing to you. For example, agencies must constantly be looking for new business to survive by dealing with clients, upselling services, and evangelizing the benefits of SEO. While these are all important aspects of the business, they take away from actually doing work for an SEO campaign.

Also, agency SEOs are at the mercy of clients and must always work under strict timelines and stay within budget. Although success of an agency depends largely on the success of its clients, it is always a struggle for the 2 sides to fully agree on recommendations and to get around limitations to implement changes in a timely fashion.

Agency life is hard, stressful, and not for the faint of heart.

Examples
Wil Reynolds, founder of SEER Interactive – SEO agency in Philadelphia
Big Oak SEO Agency

3. Independent SEO Consultant

Pros
We all want to work for ourselves, and SEOs are no different. We want to be our own boss, make up the rules, and work on our own schedules. As an independent SEO consultant, you have the freedom to work on whatever you want, whenever you want. You have complete control over how you want to approach the strategy of your SEO campaigns and can take credit for all the success. You build your own personal brand and client base, and unlike an SEO agency where everything goes through an approval process, you can act much more quickly on decisions. Income potential is extremely high and overhead expenses are very low.

Cons
On the flip side, an independent SEO consultant is a lone wolf without the support and resources of an experienced team. Sure, decisions can be made more quickly, but there is more of a chance for mistakes and screwups.

SEO consultants are also stuck with doing the more tedious tasks usually left for interns – in addition to all of the legal work, financials, and budgeting necessary in running the business. Like agencies, consultants must be effective salesmen and marketers. When do they have time to do actual SEO work?

Examples
Michael Gray aka Graywolf
Gab Goldenberg of SEO ROI Services

4. SEO Education

Pros
The main benefit of a business model centered around SEO education is that you don’t have to deal directly with clients. Instead, customers buy into your products and apply the knowledge themselves. Income potential for information products is enormous and minimal work is needed to maintain the business. Compare that to a service-based consulting model that is not easily scaled and that requires meticulous attention for each account. Aaron Wall of SEO Book and the folks over at SEOmoz are doing extremely well with this information-based model.

Cons
As good as this business model sounds (big profits for little work), it is definitely not easy to pull off. For example, the SEO Book training program pulls in millions of dollars in sales each year but only because Aaron has put in years of hard work to prove himself as an expert in the industry. He’s spent countless hours blogging, writing authority articles, consulting, and testing tactics on his own sites. Unless you are truly willing to become an SEO expert who is willing to teach others and give back to the community, this business model is not worth the effort.

Examples
Aaron Wall of SEO Book
Rand Fishkin of SEOmoz

5. Online Business Promoted with SEO

Pros
An online business allows you to work for yourself on something that you are truly passionate about. Not everyone enjoys working for clients and an online business is a good alternative to SEO consulting. There is no need to deal with client expectations and you have more freedom for experimentation with SEO strategies. Since there is also no need for client approval, the implementation process is lightning quick and SEO efforts can be seen directly in the fastest time possible. Income potential is unlimited (and scalable, unlike a service-based model) and you are motivated by your own drive to succeed and build a thriving business.

Cons
There is usually quite a bit of risk involved with building any kind of business. Income is extremely unstable and funds may easily run dry especially in the beginning starting out. It may be a while before any success is seen (if at all), but an online business requires you to stick it through and persevere. Another disadvantage of an online business or website is that unless you have a large staff, you must focus first and foremost on your product offering and business operations as well as the SEO work involved in promoting the site. Not an easy task for a one-man-show.

Examples
Sugarrae of MFE Interactive

As you’ve just seen, there are plenty of ways to monetize your SEO skills in the online world. Whether you prefer to work as an in-house SEO, agency SEO, an independent SEO consultant, an SEO-information marketer, or a web publisher/entrepreneur, there are plenty of opportunities to make money and polish your skills.

Which of the 5 SEO business models do you prefer? Be sure to vote in the poll below.

Which SEO business model are you involved with most?

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33 Responses to “The 5 Business Models of SEO – Pros & Cons, Discover the One For You”

MyBlogStore on June 24th, 2008

Good article….

Gyutae Park on June 24th, 2008

Thanks, care to elaborate on what you liked about it?

 
 
Melvin on June 24th, 2008

A very informative one… Well me, i can say I am most involved with no.5. A little bit also of what wall and fishkins are doing…

Gyutae Park on June 27th, 2008

Starting a business and promoting it with SEO is definitely a good way to start in the industry. There’s nothing like good old fashioned experience..

 
 
Patrick Altoft on June 24th, 2008

I’m totally involved in agency SEO. We can scale up pretty well because we work on a performance basis so we aren’t tied to doing specific hours for our fees.

Gyutae Park on June 27th, 2008

I see that trend more and more among SEO consultants these days and I can see it being even more lucrative than a performance-based model like affiliate marketing. Do you collect on leads even after your campaign is technically over?

 
 
Steven Bradley on June 24th, 2008

Great article Gyutae. At the moment I’m mostly involved with the SEO Consultant business model, but I’ve been looking to branch out more into educational SEO and building some of my own sites that I’ll promote with SEO.

One of the reasons I enjoy working in SEO is because of the different business models. They allow flexibility in the lifestyle you want to live while still essentially focusing on the same work.

Gyutae Park on June 27th, 2008

Thanks Steven. I definitely agree with you that SEO provides different models that allow flexibility for lifestyle options. That’s one of the great things about the Internet in general.

 
 
Jeffrey Henderson on June 24th, 2008

Great post. I think the best, especially for beginners is to do a mix and constantly evolve as you go.

I started out at an agency and very quickly started launching and optimizing my own sites, most of which generate a lot of revenue today.

Also, taking on small freelance projects on the side is a great way to get a taste of being in independent SEO while not actually giving up the security of working for a big company.

I feel that as things go forward I’ll end up primarily running my own network of optimized sites and doing limited freelance work for projects I like. Any entrepreneurial minded person in this biz will make the same natural progression.

Gyutae Park on June 27th, 2008

You bring up an excellent point about the natural progression for entrepreneurs. People who believe in the “security” of well-paying jobs will stick with in-house SEO and large agency SEO. People who want to work for themselves will usually start off on the same path but venture off into their own projects – whether it be consulting or their own sites.

Making the jump to entrepreneur certainly isn’t easy, but I think it’s definitely worth pursuing especially if it’s just on the side.

 
 
Mike Bradbury on June 24th, 2008

I am currently doing in-house SEO.

I did agency for a while, but hated the fact that I didn’t have enough time to do great work that I knew I was capable of.

One thing I will say is that you’re partially wrong about being paid to do SEO in-house. The reason I say ‘partially’ is because if you are experienced with internet marketing as a whole (not just SEO), there’s no reason why you can’t put together a resume that will make you 6 figures.

Talented internet marketers (SEO/Programming/Social Media/Usability/Email/Rss/Etc) can easily land jobs with 3 weeks of vacation, 100k+ per year, full benefits, and a cushy office.

Gyutae Park on June 27th, 2008

A lot of large corporations have deep pockets and are willing to shell out large salaries for top Internet marketers. However, this is more of an exception rather than the rule. What I meant by my comments about the limitations of upward mobility in in-house SEO was that there aren’t many opportunities to expand your job as an SEO specialist. An SEO specialist is unlikely to be promoted to Director of Marketing, for example.

 
 
Anthony a.k.a. OldSchoolSEO on June 24th, 2008

Great job breaking it down as you did. I want to point out that many (most?) of us employ a combination of the above revenue stream. To my point, you reference Aaron Wall and Rand Fishkin as SEO Educators, and both provide consulting and agency level services.

Gyutae Park on June 27th, 2008

Thanks Anthony. I’m actually working on a follow-up post right now that goes into the “combination” of revenue streams in SEO and how one can best plan a career path. Be sure to take a look when you get a chance.

 
 
Marios Alexandrou on June 24th, 2008

One of the other difficulties with in-house SEO is that you’re often a one-person team. That makes it hard to get a sanity check on ideas and can also lead to complacency. This isn’t insurmountable, just something an in-house SEO needs to keep on top of.

Gyutae Park on June 27th, 2008

Good point. Most companies are unlikely to build out an entire SEO team (otherwise they would just hire an agency). As an in-house SEO, you’re often on your own and that adds a lot of pressure without the team support.

 
 
Hamlet Batista on June 25th, 2008

You forgot about selling SEO automation software 🙂 Hubspot just got an additional 12 million in funding, so it sounds like a good model too.

Gyutae Park on June 27th, 2008

You’re right.. I didn’t even think of that one before, but I definitely should have included it. That includes all tools related to SEO – from keyword research tools to SEO automation software like RankSense. Thanks!

 
 
Malte Landwehr on June 26th, 2008

I’m really surprised how many people are inhouse. Especially in a relatively new industries like ours being independent and nursing your own projects is a huge opportunity!

Gyutae Park on June 27th, 2008

Honestly, I’m not TOO surprised. People generally have the “job” mentality and would rather work for a big company for a paycheck than to start something on their own. I definitely agree with you that there’s huge opportunity now for online entrepreneurs. Better get on it!

 
 
Dollar Dude on June 26th, 2008

Hi Gyutae Park,

I am really impressed the way you’re presenting things. I think I will become as a perfect SEO consultant if I would have read all the articles in this esteemed blog. So I have started now…(lol)

 
Hendry Lee on June 30th, 2008

I always think the first and fifth are the same, just the size of the company is different, but I can see your point now.

Online business promoted with SEO can start be very cost effective or free.

I know a lot of people who work from home are doing this right now.

 
Wil Reynolds on July 9th, 2008

Since I fall under the
“Agency life is hard, stressful, and not for the faint of heart.”

The big caveat of any SEO is setting expectations. Taking on clients who are poorly educated is a major problem, time and time again. I thin k agencies are more likely to “land grab” every client they can, then they “grow fast” adding staff which equals overhead, overhead, overhead. Then when the market starts to shift or slow they start selling to anyone to cover the overhead that equals stress. 🙂

I hate stress, so I try to work with good clients every time out of the gate! Thanks for the shout out buddy!

 
Eva White on September 24th, 2008

So far I’ve had a professional agency to the job for me while I educated myself on the more integrate matters. Hope that soon I will be able to handle my own SEO in house.

 
SEO Stuart on October 4th, 2008

I work as an independent SEO consultant and have learnt all I know from ongoing experiments, my own trials and errors and ongoing day to day online research mostly through reading informative blogs with SEO posts, interacting in SEO forums and just learning, reading and learning and then a bit more. I believe in the expression “in SEO every day’s a school day.” 🙂

 
Simon Stapleton on October 20th, 2008

Good article as it shows the options we have, and particularly the downsides to them. It’s well written and easy to understand too as I know this is a complicated subject for a lot of people.

 
SEO Tips on February 15th, 2010

SEO business can be trick. It looks so simple that anyone can try. That makes it highly competitive. But finally who gets ahead is who has enough resources and time to test and find out ever changing search engine algorithms and priorities.

 
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