Return on investment (ROI) is a fundamental KPI that gauges the profitability of an investment. Assessing SEO ROI allows you to track progress, assess SEO profitability, make informed decisions, and expand your business by increasing your SEO budget.
What is SEO ROI?
SEO ROI (return on investment) signifies the business value derived from SEO activities relative to the expenses incurred.
It gauges the return on SEO investment for both individual campaigns and the overall SEO strategy.
The aim of calculating SEO ROI is to scrutinize SEO performance in depth, enabling better decision-making based on the effectiveness of various SEO campaigns.
When managing multiple SEO campaigns across your sales funnel, it’s crucial to identify which tactics yield the highest ROI (so you can boost their budget) and which ones underperform (so you can adjust through experimentation).
This enhances SEO performance by enabling better allocation of your SEO budget.
SEO ROI enhances your capacity to make accurate, data-driven SEO and marketing decisions, removing subjective judgment and gut feeling from the equation.
What SEO Metrics Should You Measure?
You need to focus on a metric that aligns with your business’s sales goals while considering other SEO metrics as secondary.
For instance, organic traffic is a key SEO metric for ROI, but more organic traffic doesn’t necessarily equate to higher conversion rates and increased sales.
For SEO ROI, the optimal metric is one that is directly tied to revenue. These metrics can be sales for an ecommerce platform and qualified leads for B2B enterprises (unless sales tracking is enabled for your B2B entity).
Here’s a list of the essential SEO metrics to measure return:
- Organic Traffic: This metric measures the number of visitors arriving at your site through search engines.
- Conversions: It’s important to track organic conversions to evaluate SEO performance, as not all organic visitors will convert. This involves calculating the conversion rate of search-engine-driven traffic.
- Sales: While many conversions aren’t sales, tracking sales from SEO efforts is a crucial and reliable metric.
- Revenue: Linking revenue to SEO campaigns helps in measuring SEO ROI. However, revenue attribution is complex due to the various customer touchpoints across different marketing channels like paid search, social media, and email marketing.
- Keyword Ranking: This involves monitoring your target keywords’ positions in search engine results pages (SERPs). An improvement in keyword ranking signals successful SEO efforts.
- Domain Rating: The authority or rating of a domain or page reflects its SEO strength. High domain authority boosts the rankings of all internal pages by transferring authority to them.
- Backlinks: These measures the number of new backlinks gained over a specific period.
Also Read About Types of Keywords in SEO
How to Measure SEO ROI?
- SEO Investment Costs
To calculate the ROI of SEO effectively, the first step is to track the full spectrum of costs associated with your SEO efforts. This involves monitoring and measuring the comprehensive expenses of executing an SEO strategy.
Typical SEO costs can include:
- Fees for freelancers or SEO agencies
- In-house expenses like salaries and administrative costs
- Costs for website upkeep, SEO tools, and applications
To ensure accurate ROI calculation, identify and calculate the costs of the specific SEO campaign.
Consider this example:
You plan to publish 10 blog posts monthly over six months to boost your website’s organic traffic threefold. You hire an SEO agency to handle the creation, publication, and distribution of the content. The agency charges Rs 10,000 per month for 10 posts, resulting in a total SEO campaign cost of Rs 60,000.
If you opt to produce the content internally, you’ll need to account for employee salaries, SEO tools, and other associated expenses.
Maintaining accurate accounts is essential to correctly identify and allocate costs among the various SEO and marketing campaigns that may be running concurrently.
- SEO Value
How much return on investment has your SEO efforts generated over a given period?
Determining SEO value and accurately attributing it can be challenging, but it’s essential for understanding campaign effectiveness.
Several tools can help track and attribute SEO value correctly, including:
- Google Analytics: To attribute traffic, conversions, and sales to the appropriate touchpoint (learn more here)
- Search Console
- Behavioral Analytics Tools: Such as heatmaps and session recording applications
- SEO Tools: Like Semrush and Ahrefs
- Email Marketing Platforms: For tracking conversions
- CRM Tools: For identifying leads and sales
For some businesses, particularly ecommerce stores, measuring true SEO value is more straightforward. They can create attribution models in Google Analytics to determine what percentage of sales originate from organic traffic.
Campaigns aimed at boosting organic traffic, keyword ranking, or domain rating are straightforward to track thanks to various performance measurement tools.
In these instances, quantifying SEO value is essential because ROI can’t be determined if SEO value remains a qualitative measure.
For instance, an increase in domain rating from 35 to 40 must be translated into a monetary SEO value. This task is challenging and often imprecise, as it involves subjective judgment.
Similarly, if your SEO objective is to triple organic traffic within six months, you need to assign a monetary value to the organic traffic to assess SEO ROI.
Conversely, SEO campaigns targeting conversions, sales, or revenue are harder to monitor, needing accurate tracking and attribution modeling to credit the correct touchpoint for a conversion or sale.
When done properly, this provides a monetary value for your SEO efforts, making it easier to precisely calculate SEO ROI.
Assessing SEO ROI
To determine the return on investment (ROI) from SEO, use the following formula after converting both the cost and the value of SEO into quantifiable, monetary terms:
SEO ROI = (SEO Value – SEO Cost) / SEO Cost x 100
For example, if you spent Rs 50,000 on 50 blog posts over six months, leading to Rs 60,000 in sales, the ROI calculation would be as follows:
SEO ROI = (60,000 – 50,000) / 50,000 = 0.2
ROI is expressed as a percentage. Therefore, convert 0.2 into a percentage:
SEO ROI = 0.2 x 100 = 20%
In this scenario, for every Rs 100 spent on the SEO campaign, you earned Rs 120 in return.
Challenges to Measuring SEO ROI
Calculating the ROI of SEO is crucial for assessing business investments, but it comes with its own set of challenges. Here are a few common issues companies encounter when attempting to determine their SEO ROI:
- SEO requires time to yield results: SEO is a continuous process, and it typically takes four to six months after implementation to see any significant changes. This extended timeline can impact the overall ROI assessment.
- Investment and return periods are misaligned: Since SEO doesn’t adhere to a fixed timeframe, measuring overall returns can be difficult. Instead of focusing on monthly or quarterly metrics, analyzing individual pages and specific keywords may yield better insights.
- Retention effects are difficult to quantify: SEO can boost customer lifetime value by fostering long-lasting relationships and reducing churn rates. However, this advantage is nearly impossible to quantify when calculating SEO ROI.
Despite these challenges, understanding your SEO ROI is crucial for making informed decisions regarding your marketing budget. By analyzing how SEO affects your profit and generates leads in ways that are hard to quantify, you can better prioritize the strategies likely to drive revenue.
Conclusion
As highlighted earlier, SEO stands out as one of the most profitable and influential digital marketing avenues. Yet, it frequently suffers from insufficient funding.
Proving its value requires diligent measurement and reporting of ROI. We trust that the strategies and tools discussed above will aid you in achieving this objective.