What is SEO ROI?
SEO ROI is a calculation that is the ratio of profit to investment from an SEO campaign. A site should have a positive ROI if your SEO program generates more organic revenue or conversions than overall investment in the SEO program. This may take many months to realize a positive ROI, but it can compound over the years of the life of the site.
With any investment you make, whether it be financial or operational within a business, you have to understand what you get in return for that initial investment. Why would your SEO program be any different?
The term SEO ROI simply refers to the return you receive in exchange for the investment of your SEO program. If you have an ecommerce website and you invest $50,000 into an SEO program, how many sales will you need to make to get that initial investment back? How much traffic will your site need? What percentage of that traffic will convert to sales?
You, or your SEO team lead, should determine how that gets factored by using a variety of key indicators. Just as we do with paid search programs. No matter what your search budget is, for example, invest $50,000 into your paid search program every month, how much revenue is that generating each month?
Historically, through most of my career, SEO has never been associated with ROI.
I’ve worked very hard with some of the largest well known brands to show them how SEO ROI is derived. Yet there still remains this ignorance when it comes to acknowledging that SEO DOES bring in a return, in some cases, a massive amount of return on the investment.
Why Has it Been So Difficult to Calculate SEO ROI?
How many times have you heard “SEO is free” or “we get free traffic from Google so SEO doesn’t really cost us anything”
First let’s define what the “SEO investment” actually means.
You might be an independent blogger optimizing your own website, but you are investing in SEO when you create content, and apply all SEO best practices. It’s your time that you’re investing, so it’s really not “free”.
Most especially, if the business has hired an in-house SEO or agency to perform SEO for the company, that is the investment. Whatever it costs to have that person or team managing your SEO program is the investment.
The return or what we gain as a result of that investment depends on the objective of the website.
Is the site an ecommerce site?
Well that makes it fairly simple. How much is the average conversion value? If you sell 50 products ranging from $40 to $100, your average sale is $70. This also does not take into consideration any add ons a customer might make. Do they purchase just one item, or add a few others to it? For simplicity, let’s just take the average conversion value, in this example it’s $70.
Alternatively, you have a site that is B2B and generates leads for your sales team, what is the average lead worth? What is your sales team’s ability to convert that lead? I like to ask my prospective clients this question: If I send you 20 leads in one month, how many of those will your sales team convert to a sale?
What is your sales team’s ability to convert a lead? If there’s no history, then you might want to use a very low conversion rate.
Typically B2B lead gen converts at 1%, so if there is no history, we might want to use a ridiculously low conversion value, maybe .25% - to which your sales team might look at that and say, “ah we can do much better than that!”
Using a similar example to the one above, let’s say you sell systems or B2B technology and on the low end your conversion value might be $40,000 all the way up to a higher end of $100K, your average sale is $70,000.
What is generally never discussed in any SEO program is this. What is your average conversion value? What are your goals and objectives? SEO is not about getting keywords ranked or acquiring the most backlinks.
Any search engine optimization program should be about the return you’ll get on your initial investment. SEO is one of the MOST profitable marketing channels, yet it still gets largely ignored by so many well intentioned, but uneducated business leaders.
Let’s say your site generates 20 sales per month from organic traffic, with each sale worth $200, leading to a total of $4,000. You’ve also invested in professional SEO services and dedicated around $2,500 per month for those services, a very small amount I realize..
(Gain from Investment – Cost of Investment) / Cost of Investment
($4000 – $2500) / $2500
$2500 / $1500
.60 * 100
In this case, your ROI would be 60%. What other investment can bring you that kind of return? Now, it's your turn. Using the SEO ROI Calculator we created below, just plug in your own numbers.
The SEO ROI Calculator
In order to calculate your SEO return on investment you must have specific numbers ready. These numbers must be as exact as you can get them.
For example, in order to estimate additional organic traffic, you should take into consideration the size of the website, search volume and user intent of the keywords used to optimize the site, and existing rankings. Always aim to use the most realistic, and below average numbers in order to estimate what your ROI can be.
Your Estimated SEO ROI
Ways SEO Produces ROI
There are so many organic results you can acquire through organic search. No longer are we looking at a static static 10 blue links SERP like we once did back in 2007.
Over the years as Google has grown (of course there are many other search engines, Bing, Duck Duck Go, Yandex, etc, however, I use Google since roughly 85%+ of the internet searching world uses Google exclusively). Google has produced a varied SERP including featured snippets, YouTube Videos, Local 3 Pack, Knowledge panels, and more.
We have so many ways of acquiring organic traffic. When you acquire that traffic there’s a much greater chance of that traffic becoming a visitor who engages in your site, possibly takes some specific action towards becoming a customer.
INCREASE WEBSITE TRAFFIC Are you effectively building out needed content in ToFu, MoFu, BoFu (top of funnel, middle funnel and bottom of funnel)?
Have you determined which topics are high volume, and high opportunity and are they part of your overall content plan? Have you considered focussing on long tail keywords?
One of the best ways to get high converting traffic is to focus on your long tail keywords. They may have much lower search volume, BUT they generally have MUCH MORE targeted and greater conversions.
INCREASE CONVERSION RATE
It’s not enough to get that traffic to your site, you MUST figure out how to convert it. Assuming you’ve established your product or service offering strategically within a cohesive content strategy, you’ll be well on your way to acquiring targeted and well qualified leads into your site.
Now, you need to focus those well earned traffic efforts into converting them into customers. Improving your conversion rate is done through CRO or conversion rate optimization, which does go hand in hand with any SEO program.
They all work well together. (PPC, CRO, Product Marketing)
One way of doing that is to incorporate a clear call to action and identify the traffic drop off, and identify where and how to engage that traffic further down the funnel from awareness to purchase.
HOW DO YOU MEASURE SEO ROI FOR ECOMMERCE?
The very first question to be asked is “How do you make money from your website?”
The site is either a ecommerce site, where customers can make purchases right within the website usually on some ecommerce platform like ATG, Shopify, BigCommerce, etc or is it a lead generating site?
Using Google Analytics to setup your ecommerce tracking, is a simple straightforward way to determine that value.
Once you setup and establish your Google Analytics ecommerce tracking, setup the following within your monthly reporting:
- Overview: Summary of Revenue, Ecommerce Conversion Rate, Transactions, Average Order Value and other metrics.
- Product Performance: Revenue, Purchases, Quantity, Average Price, and Average QTY by SKU and Category.
- Sales Performance: Revenue by Date.
- Transactions: Revenue, Tax, Shipping, and Quantity by Transaction ID
- Time to Purchase: Days to transaction and sessions to transaction
Make sure you segment by channel, i.e. compare organic with social media, paid search, etc. This will show you where you’re acquiring your customers from.
A good thing to know so that you can double down on that channel. Ideally, you’d really want your organic search channel to bring in the largest amount of revenue.
HOW DO YOU MEASURE SEO ROI FOR LEAD GENERATION?
oLead generation is one where the actual purchase is made offline, but the interest is generated online to start with.
If the site is a B2B selling high end products or services, there might be a sales team the prospective customer has to get in touch with first before a transaction can be made. Know what the average conversion value is.
So many businesses and SEOs overlook the connection between lead gen and SEO. Is it more difficult to obtain? Yes and No.
Your SEO program should be helping your sales team in a more streamlined way.
Anytime I hear a B2B client with a lead generating website tell me their #1 KPI is to “get more traffic every month” I ask them what that will actually do for their business?
Here’s where you must be specific.
Just to say that a business who sells video surveillance software with an average conversion value of $30,000 just wants more traffic, isn’t quite right. Back to how SEO improves ROI, acquire the traffic yes, but we must ensure it's highly targeted traffic, that’s meant to assist the sales team.
Make sure to set up your Google Analytics using Goal Values views. Google provides a few default goals as well as the option to set up custom goals
Let’s say, for example, you chose the “Contact a Sales Rep” option and configured Google Analytics to track any time someone landed on your “thank you” page, or triggered an event like clicking the “Request” button.
At this point, you have the option to assign a dollar value to that goal. This would mean that any time someone completed the goal you specified, it would track $X made. If there’s more than one price point you offer, then go with the average conversion value.
Alternatively, you could use a “lifetime value of a customer” formula that can also work for many businesses operating a lead gen site.
The formula looks like this LTV X Close Rate = Goal Value.
Ask the sales team, or anyone who manages the finances for the organization to get you the average lifetime value of a customer. The Close Rate is a percentage of all leads that convert to a customer. You might have a 90% conversion rate for all word of mouth referrals, but you might want to go lower if you’ve never measured this online before. Maybe use 1% or .25% just to be on the safe side
So, for example, if you know that the average lifetime value of your customers is $30,000 and 10% of everyone who submits a form on your site eventually becomes a customer, then you could set a goal value of $3,000.
HOW LONG DOES IT TAKE TO SEE SEO ROI?
This would be the $1B question.
Why is the sky blue?
How long is a piece of string?
Or, how long will it take Google to index my page?
There are too many variables at play here.
With the right strategic approach, the right set of resources in place, you can expect to see organic rankings and traffic improvements within a six months time frame. The reality is you could very likely see results much sooner than that - depending on your site’s current state and situation, competitive nature of the market, etc.
The Bartoli Consulting Group has been able to realize massive traffic gains as much as +82% within 6 weeks. That site was a very large well known brand, but I’ve also seen much bigger gains in lesser known brand sites too.
The quick answer is it does depend, but the longer you delay, the longer your SEO ROI gains will take.
WHAT WAYS IS SEO PROFITABLE FOR BUSINESS?
As discussed, SEO can produce the lion’s share of some of the most qualified, revenue driving traffic to your website.
SEO CAN INCREASE SALES
Proven time and time again in so many studies and reports, and in many case studies I’ve produced, SEO can be the biggest revenue generating channel.
Creating content that addresses the real questions your future customers are asking about your offering.
Monitoring search demand in your industry and creating content that meets those needs. Sounds simple because it is. SEO gets complicated when we confuse things we’ve heard others do or say.
SEO myths still occupy much of the digital marketing conversation. It’s up to SEOs like me and marketing leaders to educate others on the value SEO brings to so many organizations.
SEO CAN REDUCE PAID SEARCH SPEND
One of the best ways SEO and PPC work so well together, is that they should be identifying those high CPC keywords, which may be lower converting or higher up in the buyer journey to be part of the SEO program’s focused keywords.
While the effort it takes to earn placement in organic search results isn’t free, the traffic you get from it is. It also doesn’t stop showing the second you run out of budget or stop paying for it.
SEO CAN ALSO DECREASE YOUR CAC, (customer acquisition costs)
Rather than paying for every website visitor and then losing that traffic once your campaign ends, SEO allows you to benefit from sustained free traffic from search engines over time.