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My friend just got on with somebody, forget who, doing SEO and she's pretty excited. I can see how that job could become oversaturated but I think there are still a lot of incompetent people to blow past.
Depends on the business owner for sure. Younger and more urban? Their stuff is usually tight. Most business owners still have no clue what they're doing (speaking from local research anyway). They could learn it themselves but they usually get somebody's halfwit niece to do it for them. Problem is there isn't money in it.
You need to work for a marketing firm to make money off of it -- independent is a dead end. Rural business that are more locally B2C dont really need to worry about it because communal word of mouth is still king for places like walts tires or frans bakery. Urban setting, national B2C and mostly all B2B need that adword / search engine edge.
Although adwords is way over-hyped IMO, i took a look at one of my friends Dads businesses and the poor bastard was paying nearly 16k a year for adwords and i traced back only 5 sales as a result from it. Ouch.