Any business owner or marketing lead worth their salt will direct every action they take at improving the bottom line. Marketing, especially, is a portion of your budget that should spur positive growth and increase revenues. In the digital age, SEO should comprise a large chunk of these efforts.
SEO efforts leading to positive cash flow is exactly what business owners want. Unfortunately, SEO ROI, or the return on your SEO investment, isn’t exactly the easiest metric to calculate, especially when you compare it to the ROI for pay-per-click ads. With PPC, it’s simple enough to calculate the cost of the clicks (and any costs associated with managing the effort) and match this up with revenues/sales or value of the leads generated. This guide will discuss ROI, ROI meaning in SEO, and how to calculate SEO ROI for your business.
What Is ROI?
In general terms, ROI is the return on your investment – the amount of financial gain you can attribute to a specific action or set of actions. Typically, analysts reflect ROI as the gains produced by a particular investment as compared to the cost of making the investment in the first place. The profit left over after you remove the initial amount of the investment is your ROI.
For example, let’s say your company decides to invest in an ad campaign that costs $1,000 to produce and get off the ground. Since you’re looking for the gains inspired by the campaign, you must find the average monthly profits and isolate any excess gains you could attribute to the campaign. Over three months, you see increases of $400, $500, and $450 over the average profits of your company. Calculating ROI in this case results in:
(Change in profits – Cost of campaign) / Cost of investment
($400 + $500 + $450 – $1000 / $1000 = .35, or a 35% ROI
ROI is an important concept to understand because it goes beyond even sales numbers and revenue to compare the costs of increasing your revenue. Even if your campaigns and other investments are bringing in business and money, if they’re costing you too much in the process, you likely need to reevaluate, so you can produce revenue more efficiently. Calculating ROI using a marketing ROI calculator is one of the most important moves you can make so that you have all possible information available to you when it comes to making an investment decision.
ROI Meaning in SEO
When it comes to SEO, however, ROI is much more difficult to quantify for the average business owner. SEO takes time. Unlike PPC, where the clicks will come right away (because you’re specifically paying “per click”), SEO work is not measured in immediate results. If you’re to invest in SEO, you must have a long-term view. You need to understand “what is possible” with the efforts and what the return “might be” before you make the investment, to begin with.
What measures should you be looking at to determine your SEO ROI?
First, it is important to understand the key goals of an SEO effort. Ranking #1 for “your most important keyword” is not a goal. Nor is “growing links by 100”. Your SEO goal should align with other goals from other marketing efforts, but you should have “mini-goals” to track, along the way.
Since keyword ranking is often what folks will gravitate to, allow me to share this example of why this can be “off”…If the keywords you rank first for are too vague or broad, you may not be increasing your click through rate at all. For example, if you sell syrup for shaved ice and rank high for the keyword “ice,” you won’t meet the needs of many or most of the users searching for ice. And, honestly, if Google’s doing its job, you will NEVER rank for “ice’ to begin with because that’s not a good result for the searcher.
Your SEO provider will help you to determine which keywords are important / help you to identify those which are relevant and would meet with searcher intent. Remember, “quantity” of traffic isn’t the end game. Quality of traffic is where it’s at. These are the folks who will ultimately convert into a sale or a lead.
So, what are your conversion goals with your SEO efforts? These could depend on the type of business you operate. Are you a service provider intent on building a customer base that subscribes to your newsletter? Are you an ecommerce retailer focused primarily on increasing sales? Are you a B2B entity that thrives on white paper downloads, demo requests, or registrations? Measures of your SEO ROI must determine your efficacy in achieving SEO conversions. You must understand – at least – the “average value” of such conversions.
Calculating SEO ROI
To meet your SEO goals, you must of drive quality traffic to your site. After all, you can’t expect to increase sales, referrals, or subscriptions if you can’t get new users to view what you have to offer. While site traffic isn’t the only measure of ROI for SEO, it’s likely the first you’ll need to calculate to determine whether your SEO efforts are (or ever will be) effective.
The most basic goal of any SEO campaign is to make your web page appear higher on the search engine results page, or SERP. According to a compilation of studies outlined by Forbes, nearly 85% of Google search users click on an organic result versus an ad. Nearly 68% of those choose one of the first five links. Clearly, ranking high puts you on the right track.
However, you must rank high for the right keywords; as mentioned before, ranking high for a keyword that is too general doesn’t lead to many click throughs. So, although ranking high is certainly part of SEO, getting the right folks to click to your site is the most basic component of calculating SEO ROI.
Next, you’ll need to determine how many of those specific click throughs or referral links led to achieving your SEO goal – conversions. If your ideal conversion is for a user to join your mailing list to stay up to date on your next service offerings, how many of your SEO-produced click throughs led to a sign-up? If ecommerce, are sales tracking with the improvements in traffic?
Once you have a good handle on tracing your conversions to their sources, you can note how many conversions came from your SEO campaign and the change in conversions over time. Since SEO does take time to ramp up, you should track improvements MoM (month over month) and Year over Year (seasonality something to consider?).
There are certainly intangible/immeasureable aspects to SEO, as well. Once you’ve established a broad footprint (rankings) across a multitude of relevant keywords, you’ll find that people will begin to search for your company name. Once folks are aware of your company’s domain, they may simply access the website, directly. For this reason, it’s a good practice to reflect upon multi-channel attribution models to understand the customer journey.
If you think of your own behavior, how often have you found a website via organic search and immediately converted. More often than not, you’re going to conduct other searches and spend time on other websites before – possibly – coming back to the site to convert.
So, the calculations will not be perfect (yet?). But, SEO can be effectively measured to an ROI. The idea is obviously that the investment INTO the effort will be less than the return that you are getting OUT of the effort. For this reason, you’ll want to work with a professional on determining projections/estimates for what the return might be before you start cutting checks. SEO should be measured several months into an effort and not viewed upon myopically. It will take time to realize the gains required for this to result in a positive ROI.
Ultimately, calculating an estimate of the monthly traffic you require for SEO to make a difference in your conversions and using our B2B SEO ROI Calculator or our eCommerce SEO ROI Calculator can help you get a feel for your current and/or possible SEO ROI.