Unleashing the Power of SEO: A Blueprint for Positive Unit Economics in Web Products

In the dynamic world of digital products, the intersection of unit economics and visibility determines the trajectory of success. Businesses are looking for better ways to improve their growth strategy, yet, many will altogether skip the formulation of new approaches in an attempt to win customer loyalty by discounting or even selling below cost for a certain period of time.

But this approach won’t position your company for long-term, stable success. Unit economics help you understand how much value you create and capture from each unit, as well as the scalability and sustainability of your business model, by showing the revenues and costs associated with each unit of your business, such as a customer, a product, or a service.

But this approach won’t position your company for long-term, stable success. Unit economics help you understand how much value you create and capture from each unit, as well as the scalability and sustainability of your business model, by showing the revenues and costs associated with each unit of your business, such as a customer, a product, or a service.

Positive unit economics signify that customers are ready to pay more than it costs to acquire and serve them. If that is the case – congrats! You have formulated a viable and appealing value proposition. Now, scaling this is a different story, but the goal is to increase revenues at a pace surpassing your growing costs as you expand your customer database. Now, that is a real competitive advantage.

Today, SEO is the linchpin for achieving positive unit economics in web products. From overcoming the overshadowing dominance of paid channels to strategic positioning in the market, SEO becomes the driving force behind cost-effective user acquisition. How? Let’s explore down below.

Niche Prominence, the Cost of Attraction, and Competitor Dynamics

In this battlefield of digital visibility, securing a prominent niche position serves as the cornerstone principle of the unit economy of web products. This approach can help you prevent paid channels from eclipsing free ones. Failure to do so will result in a significant increase in the costs associated with attracting users, which will compromise your unit economics strategy. SEO helps you position your company online by keeping your organic channels effective in attracting users.

Let's imagine a situation:

Company A does not invest in SEO and has a positive CPA (Cost per Acquisition to LTV Lifetime Value) ratio with contextual advertising on Google for specific queries. On the other hand, Company B strategically invests its marketing budget in SEO and content tailored to its niche, targeting audience queries.

At present, Company A may be enjoying a higher return on investment from its marketing budget. However, projecting a year into the future reveals a different story. Company A relies solely on contextual advertising, and it's crucial to bear in mind that as the niche grows, advertising rates will also rise.

Consequently, Company A will find itself needing to invest increasingly more in contextual advertising.

Meanwhile, Company B has secured at least one position in the top 10 for key queries in its niche (let’s say, the same ones on which Company A buys displays).

Thus, in a year, Company A will receive an increase in costs proportional to the growth of the bid for contextual advertising, while Company Bcan strike a balance between contextual and organic reach or even reduce costs by implementing a well-thought-out content and link-building strategy.

Consider the example in the screenshot: Awin and Voluum pay for traffic, while Refersion and Adtraction generate traffic for free through organic means, yielding a higher return on investment. It's also worth noting the significance of CTR, as users are becoming accustomed to paid content and increasingly ignore it.

In the digital ecosystem, competitors are relentless in their pursuit of recognition and reach (as they should be, and so should you!). Neglecting SEO not only contributes to the dominance of paid channels but also gives competitors a strategic advantage.

Competitors quickly take over by gaining recognition and reach in the marketplace. This not only affects visibility but also disrupts the unit economy, making it harder and more expensive - for you - to attract users.

In this battleground of digital visibility, securing prominent positions within a niche serves as a cornerstone principle in the unit economics of web products. This approach can help you prevent paid channels from overshadowing free ones.

Choosing not to do so will result in a significant increase in costs associated with attracting users, challenging your unit's economica strategy. SEO helps you position your company on the web, preserving the effectiveness of your organic channels in user acquisition.

In the digital ecosystem, competitors are relentless in their pursuit of recognition and reach (as they should be, and so should you!). Neglecting SEO not only invites the dominance of paid channels but also hands competitors a strategic advantage.

Competitors are quick to seize positions, gaining recognition and reach in the market. This not only impacts visibility but also disrupts unit economics by making user acquisition more arduous and expensive – for you.

Strategic SEO and the Traffic Magnet

Strategic SEO is a powerful magnet for organic traffic. By conducting comprehensive keyword research and understanding the competitive landscape, web products can align their content with user needs.

This not only enhances product relevance but also ensures that the attracted traffic is more likely to convert. Thus, SEO becomes a catalyst for cost-efficient user acquisition and positively impacts unit economics.

For example, after researching your competitors' keyword frequency and top content, you find that your competitors' most traffic-generating article is about affiliate marketing for Instagram Influencers - you can not only create competing content, but you can also get better at CustDev and roll out Instagram-friendlier features for your platform, like customized landing pages for Influencers.

This way, you not only compete effectively but also use data-driven decision-making to better your product's appeal and performance in the market.

This not only makes the product more relevant but also ensures that the attracted traffic is more likely to turn into conversions. Essentially, SEO becomes a driving force for cost-effective user engagement, exerting a positive influence on the overall economics of the business unit.

Looking at this formula, you can see that when you start with SEO, you actually increase your marketing budget (Total Marketing Cost) and attract fewer clients, consequently causing the CPA to rise.

However, your challenge is to organically scale your SEO budget while keeping your CPA at an acceptable level. After six months, you should see a dynamism in the bottom figure - due to conditionally free traffic from SEO.

It will help you equalize unit economics at the moment and continue scaling SEO. If it doesn't happen - urgently reconsider your strategy. As soon as the % of organic traffic starts to dominate over paid traffic, you will fully feel the productivity of SEO for your unit economy.

The Resource-Intensive Nature of SEO

While SEO offers a plethora of benefits, it comes with its share of challenges. The process is resource-intensive and often time-consuming. However, my article emphasizes the importance of investing in SEO from the outset.

Despite the initial demands, this investment lays the foundation for future scalability, and starting early makes subsequent scaling efforts more streamlined and cost-effective.

Yet, acknowledging the resource-intensive nature of SEO is crucial. It demands a significant investment of time, effort, and expertise, and the foresight to start investing in SEO early in the product life cycle paves the way for future scalability.

Although the rewards may not be immediate, starting early makes the long-term payoffs and subsequent efforts more streamlined and cost-effective.

Beyond being a traffic driver, keyword tracking becomes a tool for uncovering invaluable product insights and market trends. Taking key positions for targeted queries should be a top priority for web products, aligning SEO strategies with user intent and industry demands.

Navigating the Tech Landscape

Tech companies, with their unique challenges, can benefit immensely from a holistic SEO strategy. Relying solely on paid advertising is insufficient. A comprehensive SEO approach is indispensable for tech companies, ensuring their products surface organically in response to relevant queries.

For tech web products, having a strong presence is practically a must-have, given that it provides the most direct path to conversion.

This is in contrast to mobile apps, where downloads typically originate from the app store, or high-checkout businesses, where direct sales prove to be the most effective.

To Conclude

From defending against paid channel dominance to serving as a cost-effective formula for customer acquisition, SEO emerges as the transformative force that can reshape the destiny of web products in the digital arena and is the linchpin to fostering a positive unit economy for web products.

Choosing not to secure prominent positions within the digital landscape can put your business at risk of paid channels overshadowing free ones, subsequently inflating the cost associated with attracting users.

A strategic approach, on the other hand, proves to be a potent tool for attracting organic traffic, making it a key driver for cost-effective user acquisition. Particularly for web products, optimization for relevant keywords emerges as the swiftest route to conversion, distinguishing it from the more direct sales approaches found in other business models.

In essence, a well-executed SEO strategy not only secures visibility but also becomes a strategic advantage in achieving a positive unit economy for web products.