Why Are Great SEO Services Expensive & Hard to Find?
TRUE or FALSE: economist George Akerlof won a Nobel prize for his 1970 paper about the business of Search Engine Optimization?
I’m sure you got that one right – it’s false, because the internet and SEO didn’t exist back in 1970. But he did write about the business of used car sales – and what’s more, it’s completely relevant to search engine optimization.
In the paper he discusses what happens a seller knows more about a product than the buyer, known as information asymmetry. At the time of writing, it was difficult for customers to get information on the true value of a secondhand (used) car.
Search Engine Optimization is a complex, technical subject with many variables. It’s quite common that the SEO service provider knows a lot more about SEO than the buyer.
Let’s timewarp back to 1970 and compare our SEO business with Honest Abe’s Used Car dealership. Abe swears he doesn’t have any “lemons” for sale (lemon is a US slang term for a car that is found to be defective only after it has been bought). But does he?
- Average Joe visits Abe’s dealership to buy a secondhand car from Abe. Joe cannot truly judge whether the car Abe showed him was in poor, average or even excellent condition.
- Therefore Joe buys based on his perceived value of the car – his best guess being that it is in average condition.
- Abe isn’t making much margin on his good cars any more, so he decides to create high perceived value by forgetting about selling good cars at average price – instead he raises the price of his low quality cars – the lemons – up to the price of an average car. Nobody knows the difference anyway.
- Mike wants to sell his pristine, showroom condition car. But everyone he talks to says he wants too much for it – “Look at the price of cars at Abe’s”, they say – but Mike knows Abe is selling lemons.
- Mike decides to keep his pristine car, it’s not worth selling – buyers would only pay the price of an average car and it’s worth far more than that.
A “lemon market” can be produced if:
- there is information asymmetry in which no buyers can accurately assess the value of a product through examination before sale is made and
- all sellers can more accurately assess the value of a product prior to sale, and sellers have no credible disclosure technology (sellers with a great product have no way to disclose this credibly to buyers), and
- there is a range of differing seller qualities exists (or the average seller type is sufficiently low so the buyers are pessimistic about quality), and
- there is no effective public quality assurances (by reputation or regulation and/or of effective guarantees/warranties).
Sounds like SEO
- Average Joe visits Abe’s SEO agency Spamtastic LLC to buy SEO services from Abe. Joe cannot truly judge whether the SEO Abe showed he would do him was poor, average or even excellent quality SEO.
- Therefore Joe buys based on his perceived value of the SEO – his best guess being that it is in average condition.
- Abe decides to create high perceived value – by raising the price of his low quality SEO service up to the price of an average SEO service.
- Mike wants to sell his pristine, high quality SEO services. But everyone he talks to says he wants too much for it – look at the price of SEO at Abe’s, they say.
- Mike decides to keep his SEO for his own sites, it’s not worth selling – buyers would only pay the price of an average SEO and it’s worth far more than that.
This is why there is a huge number of low quality SEO providers, many of whom overcharge, and it’s also why many of the best SEO people choose to only work on their own personal projects. The major difference in the comparison of car vs SEO is the potential value of SEO being exponential.
I mentioned in another blog post that I’m giving a lot of thought to whether to bother selling SEO-as-a-service or stick with SEO only for internal projects – this is the reason why I’m thinking about that.
Enough problems, what’s the solution?
The customer must educate themselves up to a level whereby they can distinguish between lemons, average quality SEO and high quality. That requires a willingness to invest money and time.
The other great point made by Aaron in the infographic is:
More knowledgeable SEOs who care about the quality of their services often use language like “maybe” and other qualifiers, because search is complex and constantly changing.
Paradoxically, usually the more certain the person selling SEO is, the less likely they are to be trustworthy
Bertrand Russell put it like this:
“The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser men so full of doubts.”
The link between SEO and the Market for Lemons was published by John Andrews in a super blog post called A “Market for Lemons”, a Nobel Prize, and Snake Oil SEO.
George A. Akerlof wrote “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism” and published it in the Quarterly Journal of Economics (The MIT Press), 1970.