SEO ROI: The 3-Step Cheat Sheet for Marketers
How do you prove the true value of search engine optimisation?
In most areas of your business, it’s easy to see a return on investment. You can see which products get the most sales. You can report on which sales events drive more revenue.
For other areas, that’s easier said than done. And SEO has historically fallen into that too-hard basket.
Here’s the challenge:
You know that SEO is important for your business’s profitability.
But if you want to get organic search activity and budgets approved, you need to prove it to your bosses.
If you want to build a long-term strategy that drives lead generation, you need to measure the real impact of SEO.
That means finding the hard numbers that prove ROI for SEO.
Now for the important part:
Search Engine Optimisation Return on Investment CAN be measured.
It’s simply a matter of understanding how SEO ROI is generated, tracking the right metrics, and seeing how it increases revenues and cuts costs at the same time.
In this article, we’ll reveal how to do all of that and more, so you can explore the revenues SEO can really produce for your business.
What is SEO ROI?
SEO ROI is a calculation that measures the return on investment of search engine optimisation.
It answers the fundamental question that every marketer and business owner needs to ask:
Are we getting more out of this than we’re putting in?
Granted, you can use lots of metrics in Google Analytics to determine the success of SEO – monitor traffic, referral sources, conversion rate, and more. (Discover the 11 SEO Metrics That Define Your Success).
(Source: Search Engine Journal)
Those metrics provide information you can use to optimise your search campaign. But if you really want to know the true value of SEO to your business, you must pay attention to one thing:
Return on investment.
If you know the return on investment of your SEO activity, you can show the “powers that be” how search engine optimisation has generated traffic, leads, sales and revenue, and justify spending on long-term marketing campaigns.
Because you know that one of the essential truths of SEO is that you should be in it for the long game.
Calculating SEO’s return on investment isn’t as complicated as people think.
First, you need a clear picture of conversions and goal completions.
Second, you need to know the cost of your investment.
Then, you put these into the SEO ROI formula:
(Gains – Costs) / Cost of Investment = SEO ROI
Ready to work out the ROI of SEO?
Step 1. Measure the RETURN of SEO
The process for calculating the return in SEO is depends on how you make money from your website.
A). eCommerce websites
eCommerce websites are the easiest to calculate ROI for, because you can report on specific dollar amounts that organic search generates through eCommerce purchases.
Start by setting up eCommerce conversion tracking in Google Analytics.
This allows you to perform conversion tracking on your site and see the conversion that earns revenue. Simply add the tracking ID to your website (or ask your web guru to do it) that sends your eCommerce data to Google Analytics.
This will generate eCommerce tracking.
Once your eCommerce site is connected to Google Analytics, establish which ecommerce goals and behaviours you want to track.
Some examples of goals you can set include:
- Conversions by traffic source
- Lead form subscriptions & email list subscriptions
- Add to cart
- Abandoned cart
- Traffic from organic sources
To set up eCommerce analytics goals, follow these steps
- Select the Admin panel
- Select “Goals” from the right column
- Complete Goal description and Goal details
Now you can go to the overview, which tells you revenue, eCommerce conversion rates, transactions, average order value, marketing campaigns, etc:
Segment this data by channel, including Organic Traffic, to see precisely how much revenue is coming from your SEO activities.
B). Lead generation websites
Lead generation sites need a different approach because while they are used to generate interest online, the actual purchase is made offline.
Not everyone who shows interest will become a customer. Just because someone downloads an ebook or submits a form doesn’t mean they will buy from you.
So how do we adjust our approach and calculate the value of SEO?
Use goals and assign dollar values to those goals.
In Google Analytics, set up Goals.
For example, if the objective of a page is to get visitors to fill out a form and download an ebook, set that up as a goal.
Or, you can choose to have Google Analytics track any time someone submits a contact form and lands on your “contact thank you” page.
Here’s what that looks like on Google Analytics:
(Source: Social Media Examiner)
See how a value has not been assigned to the goals, so the Goal Value is $0.00?
Here’s the important part:
You have the option to assign a dollar value to your goals.
It’s this dollar amount that will give you the real ROI of your SEO activities.
But how do you know what dollar value to assign?
Use this formula:
LTV x Close Rate = Goal Value
LTV: Average lifetime value of a customer
Close Rate: Percentage of leads who become customers
Let’s say the average lifetime value of your customers is $1000 and 25% of everyone who submits an online form becomes a customer. You could set a goal value of $250.
Then, segment by channel to see how much revenue SEO is generating for your business.
Step 2. How much does SEO cost?
Now that we’ve talked about the “R” in SEO ROI, let’s focus on the “I” – the investment.
As you know, your site’s ranking in organic search results is earned and not paid for. So, how do you spend money on SEO?
Your investment comes down to:
A). In-house SEO resources
Do you hire employees to work on SEO? You need to account for this in your costs. This could be a dedicated SEO marketing manager, writers who create SEO content, or web developers who spend time optimising your website for the best search rankings.
Next, estimate how much time they spend on SEO efforts and multiply that by their salary.
For example, $100K salary x 25% of time on SEO = $25K per year.
Then divide this by the period of time you are tracking, e.g. month, quarter, etc.
B). SEO agency
Do you outsource some or all of their SEO work to an agency? This is easier to work out. If you have a digital marketing agency doing lots of projects, again look at the percentage of time they spend on SEO.
C). SEO technology
Good SEO requires a suite of SEO tools. And while there are some free versions out there, many of the best tools require a monthly subscription or small investment, like SEMrush, Moz and Ahrefs.
Tally up how many tools you have and how much they cost. If you share them with other teams, allocate a percentage.
Step 3. Calculate your SEO ROI
Now you’ve determined how much revenue your SEO strategy generated during a specific time period (typically a month or a quarter) and your SEO investment during that time, you need to plug these numbers into the following formula:
(Gain from SEO – Cost) / Cost = SEO ROI
Multiply that number by 100 to calculate the ROI as a percentage.
Some companies calculate the ROI using the net profit from each sale instead of the total revenue. Whatever calculation you use, make sure it’s consistent with how ROI is measured in other parts of the company.
Gain from SEO: $500K
Cost of SEO: $20K
(Gain from SEO – Cost) / Cost
(100,000 – 20,000) / 20,000
80,000 / 20,000
4 x 100
Your return on investment from SEO is 400% — that’s impressive!
Check out our SEO ROI Calculator to discovers yours today!
How long does it take to see ROI from SEO?
The quick answer? Six months is typically a good length of time to see significant results from SEO efforts.
You’ll see the biggest gains from six to 12 months.
The long answer is that the time it takes before seeing significant results depends on a range of factors, such as the authority of your site, any penalties, where you currently rank in organic search, and the time and effort you invest in SEO services.
Whichever way you look at it, SEO is a long-term investment.
One of the biggest mistakes of SEO is not spending enough time on it. You won’t see the results overnight, like some other digital marketing strategies. It requires maintenance and ongoing attention to see any revenue-shifting, sustainable results.
That effort never truly ends. But, as you’ll see when you measure your ROI, it really does pay off!
Is SEO profitable?
Knowing how to calculate the return on your SEO campaign investment is valuable, but there’s more to it than that. What are some real-life examples of benefits and cost savings you can expect?
1. SEO drives a lot more traffic
More organic traffic doesn’t increase revenues all by itself. After all, if that traffic visits your website without taking any revenue-generating actions (hitting your conversion goals), what’s the point?
But organic search traffic is important.
The simple truth is you can’t sell to someone if…
- They can’t find you online.
- They don’t click through to your site.
2. SEO helps you attract the right audiences
It’s not just about the QUANTITY of traffic to your website – it’s about the QUALITY of this traffic.
To get a good SEO ROI, you want a large proportion of that search traffic to be your target customer.
If they land on your website and find a user-friendly and conversion optimised design with all the right calls to action, that’s where the magic happens and your conversion rate grows.
3. SEO can increase sales
Optimised content is the key to increasing sales through SEO.
Here’s how SEO content can work to increase sales:
When prospects search on Google or other search engines for information about a product or service similar to what you offer, they are shown all sorts of content that’s designed to answer their questions. Social media posts, web pages, blogs and other content – it’s all there to educate them and lead them to make a purchase decision.
Let’s say you want to work out which mobile phone to buy:
When your content is the best quality, most relevant, and most authoritative, it gets shown by Google before the others and drives clicks from organic traffic. We’re talking highly qualified clicks, because your content directly answers their question and they are more likely to buy from you.
4. SEO strengthens your brand equity
How does SEO strengthen brand equity? Because SEO is all about improving user experience. Website speed, web design, high quality content, mobile friendliness – all these factors are used by Google to decide where you should rank.
They also help you build a strong brand reputation. Because if someone visits your website and finds it is easy to navigate, with no broken links, and useful content, they are more likely to come back. That’s when your conversion rate soars.
5. SEO can cut your paid ad spend
Pay per click or paid advertising is a powerful digital marketing strategy. No question. Whether it’s social media advertising or paid search advertising, with the right know-how, you can put hyper-targeted ads in front of your audience in just a few hours and drive qualified traffic to your website instantly.
But there’s a catch – you have to pay for every single one of those visitors.
And there’s no guarantee how much you’re going to pay from one week to the next. It all comes down to how many people are bidding on those keywords, how much they’re bidding, and more.
Investing in SEO can actually help you minimise your spend on paid advertising. You just need to play to their strengths at different stages of your digital marketing campaign.
Do you have a very strong SEO presence for high cost keywords?
If you’re already ranking well for high cost keywords, reduce your PPC spend on them.
You could wind up with the same amount of conversions without investing in PPC, meaning a lower cost per conversion, and a better conversion rate. Your conversion tracking metrics will soon prove this – make sure your checking them per month, or even more frequently.
6. SEO can lower your customer acquisition costs
With PPC, you pay for every website visitor and then lose that traffic the minute your campaign ends.
Now compare that to traffic earned through good white hat SEO practices which is free AND it keeps going.
So long as you continue to optimise your website and content marketing, and invest in good SEO services, you can increase your website traffic from search engines without increasing your costs (it’s the long game, remember).
Over time, this will lower your customer acquisition costs per month and improve the ROI of SEO.
7. SEO can increase profits from existing content
Let’s say you already have a library of awesome content on your website before you start SEO efforts.
There’s a good chance that content holds untapped potential to improve our SEO ROI.
You’ve already invested in content marketing and paid for the content to be produced (either in dollars or hours). You’ve probably shared it all over social media too.
But Google might only be seeing a small percentage of those pages – which means your target audience isn’t finding them either.
Even if Google has found them, they won’t be ranking as high as they could in organic search. So, to get some quick wins for your ROI, you can apply SEO strategies to those web pages.
8. SEO can protect your revenue and traffic against losses
One thing that SEO requires is proactive monitoring and management. You can only get results if you consistently check and optimise your website. It’s just good marketing.
If you don’t, you can expect unexpected events and issues to damage your site usability, ranking, revenue and reputation.
What kind of events and issues?
The number one event is algorithm changes from Google. For example, several times a year, Google rolls out a “Core Update”, a regular update to ensure it is presenting relevant and authoritative content to users.
Example of Google announcing May 2020 core update:
The fact is, if you aren’t regularly monitoring your website for SEO, it will slide down the rankings before you can say “Goodbye traffic”.
The simple act of checking your site on a regular basis – the fundamentals of SEO marketing – can save you money and increase the ROI of SEO.
Ready to fire up your SEO ROI?
Truth time: SEO can produce the lion’s share of the qualified, revenue-driving traffic to your website. But squeezing the best ROI in SEO efforts won’t happen overnight. To get sustainable results, you need an evidence-based strategy and the right tools tailored to your marketing goals.
If you’re looking for an experienced SEO agency to partner with, claim our FREE offer today — get your Free Digital Audit and find out exactly how to unlock digital growth.