Calculating SEO ROI

What is SEO ROI?

The benefits of SEO (Search Engine Optimization) appear to be plentiful on paper, however not every SEO campaign is successful. This is because a lot of time and effort must be put into SEO and each campaign follows a different process that either results in success or failure. If you need to measure the level of success that your SEO campaign has experienced, there is a convenient method that comes in the form of return on investment (ROI). ROI is a term that determines the returning profit made from the initial investment. ROI for SEO determines the return that an SEO campaign has generated when compared to its initial investment. However, SEO ROI can be difficult to calculate due to its frequently changing algorithms and factors.

Why is it difficult to calculate SEO ROI?

To identify how successful your SEO campaign has been so far, the most common indicators are the level of organic traffic and the search volume of your business. However these factors do not directly cover how much money you have earned from the initial investment of your SEO campaign. Unlike PPC (pay per click), SEO does not have direct fixed costs so it can be more challenging to calculate. For example, for SEO you do not have a fixed cost associated with every click, unlike PPC.  This is where SEO ROI comes in, as it is a formula that can calculate how much money you have made from the initial investment. Calculating SEO ROI can vary from E-commerce to non Ecommerce websites. Here is how their methods of calculation differ:
  • E-Commerce websites: For ecommerce websites, calculating your ROI as a percentage can be done though a single formula:

    • SEO ROI = (SEO Revenue – SEO Cost) / SEO Cost
  • Non E-commerce websites: Calculating the SEO ROI for your business is not as straightforward as calculating it for an ecommerce website. In fact, it commonly requires a marketing professional to determine the exact SEO ROI for a non ecommerce website. This is because there are many different factors that a non e-commerce website has which can affect the calculation of its SEO ROI. If you have a non e-commerce website that you want to determine the SEO ROI, contact our team at 23e2 Digital Marketing today.

Calculating the complete ROI of your SEO campaign can be more complicated if you have a non e-commerce website.

What steps can I take to calculate my SEO ROI?:

If you are currently running an SEO campaign for your business, you probably understand that the goal of a campaign is to improve your Search Engine Results Page (SERP) ranking. The two most basic indicators of a successful campaign is if your SERP ranking has risen or if you are experiencing more website traffic. However these indicators can only take you so far and they will not present you with the full story of your SEO campaign. Because of this, we have prepared a more thorough step-by-step process to determine the total ROI of your SEO campaign:

Preparing: Keyword Exclusion

  • Before making any calculations, you will need to exclude your branded keywords that could give you an altered ROI value. What are branded keywords? Branded keywords are keywords that use your business name when searching instead of searching for a keyword/keyphrase that relates to the product/service they are searching for. For example, if your business name is “Bob’s Car Parts”, then you should exclude any keyphrases that are variants of “Bob’s Car Parts”.

Determining how much you have invested into SEO

When creating an SEO campaign for your business, there are a number of costs that can have an impact on your ROI. These costs include:
  • In-house SEO resources: e.g. hourly/daily rate rate for team that is strictly executing SEO campaign
  • Agency resources: e.g. monthly fee for SEO agency to provide you with services
  • Tool investments: e.g. any software that you purchase to assist in the execution of your SEO campaign

Setting goals (or conversions)

  • Using a tracking tool such as Google Analytics you can track actions such as a newsletter sign-up, an email opt-in, a website registration form (etc..) by creating them as goals. Creating each of these actions as goals can help you calculate the total ROI based on all of your conversions.

Giving each type of goal/conversion a certain value

After you have set up your goals, you will need to give each conversion type a monetary value. Remember, not every conversion is worth the same, as a sign-up form could be worth more than a pageview to you. To determine values for each of your goals, you will need to follow a couple of steps:

1) Determine how many of your leads convert into sales

  • E.g. if you get 100 people that sign up for email updates on your website but then 34 of them become customers, that means that the conversion rate for email sign-ups is 34%.

2) Determine how much each sale is worth on average

  • E.g. if each of your leads that converted to customers spent $70 on average, then your average value is $70 per sale.

3) Determine how valuable each of your leads are

  • To determine how valuable each of your leads are, you need to do some basic math by multiplying how many customers you earned by their average spending then dividing it by how many leads you acquired.
  • E.g. 34 customers * $70 average c. spending = $2380 total c. spending 
  • E.g. 2380 / 100 leads = $23.80 average value of each lead

Monitoring and analyzing the status of your conversions

  • Once your goals have been set up, you should give your website at least a month to gather data of your website and its traffic. Following this, a tool such as Google Analytics will be able to provide you with details of your web traffic. Using Google Analytics can help you determine whether your goals were met through organic search, emails, referrals, social media(etc..). You should mainly examine your conversions that came as organic traffic, as SEO’s success revolves around your organic traffic.
  • For example, if you gained $10,000 in organic traffic revenue but paid an SEO company $1000 for content creation and keyword research, then your ROI would be $9000.

The calculations of your ROI

To calculate your ROI percentage, you can use the follow the formula below:
  • (investment gain – investment cost) / investment cost
  • E.g. (10000-1000)/ 1000
  • = 9000/1000
  • = 9 * 100%
  • = 900 
  • Therefore, your ROI would be 900%. In other words, for every $1 you spend, you receive $9 in return.
By following this step-by-step process, you should be able to calculate the ROI of your SEO campaign. If you want to start tracking the ROI of your SEO campaign or have any questions regarding SEO and the calculation of ROI, feel free to contact 23e2 Digital Marketing.
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