Why is it that digital marketers pour so much money into their SEO efforts?
Well, considering that more than half of all of a business’s traffic comes through organic search, it’s a good idea to optimize your website and capture as much of that traffic as possible.
More traffic can mean more revenue. However, to know what to focus on to improve your website’s revenue potential, you have to know how to measure the ROI of SEO accurately.
Once you read this blog, you’ll be well on your way to understanding what drives SEO ROI, how to communicate SEO ROI to clients, and how to increase ROI for your own website.
What is SEO?
SEO is an essential component of any marketer’s strategy. Since 2008, spending on SEO from 2008 to 2020 has grown over 7x from $11.5 billion to just under $80 billion.
This trend isn’t stopping any time soon, so let’s quickly cover what moves the needle to drive ROI.
Every customer online has something they’re looking for – known as their search intent.
Since so many people discover new companies through organic search, any website hoping to succeed online needs to build out a strong SEO strategy that understands users’ search intent and matches them with information accordingly.
Building SEO for strong ROI involves a wide range of practices, including:
- Building intuitive website structures. This makes it easier for both Google and users to navigate, improving the users’ experience and your search ranking potential.
- Finding unique and relevant keywords through keyword research that can help draw more traffic to your website.
- Establishing authority online through high-quality content and backlinks.
- Analyzing results and locating areas for improvement.
By understanding how SEO works, you can maximize your potential customer base and grow more leads for future business.
Why SEO Matters
Without SEO, you can’t expect your website to reach a lot of eyes.
Social media gets a lot of attention from marketers – and for good reason – but it’s still a fact that SEO gets over 1,000 percent more traffic than social media.
The first-ranking search engine result gets a CTR of 39.6 percent. Result two gets 18.4 percent, and result three gets 10.1 percent.
And if you think the top three spots are too far out of reach for your small business, consider that the biggest jump in traffic comes from moving from position #11 (page two) to position #10 (page one).
Just getting your website onto the first page results in a 143 percent boost in traffic. It’s the low-hanging fruit like this that can kickstart your SEO progression.
So clearly, SEO plays a major role in connecting your company to customers, and there are plenty of options to start driving more traffic to your website. But how do you convert that traffic into revenue?
What is ROI of SEO?
The ROI of SEO is your return on investment. It’s the results of your SEO strategy coming to fruition.
Technically speaking, the ROI represents a ratio of costs to gains. How much money did you invest, and how much did it pay off?
For example, let’s say you’re a budding local coffee shop that recently created a website to share content about your packaged coffee bean products and reach a larger audience. As part of your SEO campaign, let’s say you spent $100 on localized SEO efforts for other counties near your business’s location, and it netted you $300 in sales as a result. In this case, your SEO ROI is three. If you made $500, it’s five.
Whether you are doing SEO for your own business or your client, it’s essential to have a concrete plan to measure your ROI to show your success or indicate you need to change your strategy.
How to Measure ROI of SEO
Measuring your SEO returns, at the core, requires just two things: costs and returns. Let me walk you through it.
Calculate SEO Investments
First off, you need to sum up all the total amount of money you’ve put towards SEO.
Some of the typical costs associated with SEO include:
- SEO tools, like Ubersuggest, Ahrefs, SEMRush, and others
- Staff-related costs, like SEO professionals, writers, editors, etc.
- link building expenses
- website maintenance costs
There may be other costs to consider depending on your industry and the type of campaign you want to run, so figure out where you’re spending and the total amount you’ve spent.
Calculate the Value of Organic Traffic Conversions
Next, you’ll want to calculate the total value of your organic traffic conversions.
To know this, you’ll need these four inputs:
- Estimated monthly value: how much value you generated in a month for a given keyword
- Total monthly searches: the total search volume for a given keyword
- CTR [Position]: the estimated click-through rate for this keyword
- Value per visit: how much value each visit generates
This one comes with a handy formula for us to put these inputs together:
Estimated monthly value = Total monthly searches * CTR [Position] * Value per visit
This will tell you how much money your efforts are bringing in (or losing) each month and should give you a better idea of where the weak links may lie.
Account for Assisted Conversions
It takes an average of seven interactions with a company for someone to purchase one of its products or services.
Assisted conversions show you which of your website’s traffic sources are serving as one of those seven interaction points and which sources are pushing them to conversion.
Accounting for assisted conversions helps you understand your funnel: you’ll uncover deeper insights into where customers are going to convert the most and where to focus on future investment.
For example, let’s loop that local coffee shop back into play. Using Google’s Assisted Conversions report, you find out that most people landing on your website stumbled upon your brand through social media.
If you then determine that social media users coming to your website far more often than through organic search, that may give you a better idea of where you should be focusing to drive SEO ROI.
How Long Does It Take to See ROI From SEO?
Investing in SEO is a lot like planting crops. You may plant your seeds today, but the return you’re looking for won’t come for several months or even years.
It can take anywhere from three to six months for you to start noticing any results, and research from FirstPageSage concluded that most B2B companies have to wait 8-10 months on average to break even on their investment in SEO.
That means now is the best time to focus and improve ROI through SEO.
Keep in mind that it’s important to set expectations for SEO results both for clients and internal stakeholders. Here are just a few quick SEO fixes that you can do to get some initial movement:
- Fix broken links and incorporate redirects
- Optimize images: reduce file sizes for quicker loading speeds, and include alt text for greater accessibility
- Diversify content: Add videos, interactive questionnaires, customer reviews, or other basic content elements to the website for a better user experience
- Work internal links to other relevant content into your copy
- Delete spammy backlinks
Challenges of Calculating SEO ROI
Growing your SEO ROI is by no means a smooth-sailing process. Compared to paid, how you determine organic SEO ROI is very different, and creating clear insights and plans of action can be difficult.
SEO’s Impact Takes Longer To Show
Piggybacking off of what we just covered, it’s important to understand that efforts you make today won’t yield any immediate results.
You’ll need some patience to start tracking the results, and thus it can be hard to know which changes are having the greatest effect. So before you even launch your campaign, start thinking about quick wins and immediate fixes you can get to win client confidence early on. It’s also important to prepare to find the signs things are starting to trend in a good direction.
Forecasting SEO Can Be Difficult
What works for your website today may not work tomorrow. The needle is constantly changing as consumer interests change, so the SEO changes you make need to fall in line with consumer trends.
Each SEO metric has its own purpose, but knowing when certain data points are relevant to your goal is critical to a successful SEO campaign.
SEO forecasting involves looking at the strategies you’re employing now and determining what they may yield in the future.
What’s the problem?
SEO is incredibly variable, and there are no guarantees.
For example, you can estimate that your SEO efforts could land your page in the top 10 search rankings, but that doesn’t mean it will happen. Moreover, if you want to calculate the return you could generate from landing in the top 10 position, forecasting becomes even trickier.
It’s hard to know where your SEO efforts will take your website, and it’s even harder to know how those changes will affect your ROI.
Lack of Fixed Costs To Track
In the world of SEO, everything is variable.
This can pose a challenge when trying to calculate your expenses over time. There are no consistent costs, so you’ll need some experience to get a better idea of your average expenses over time.
To gain paid traffic, there are a lot more defined parameters to work within.
Consider someone looking for tax software for the upcoming tax season. They may search “best tax software for small businesses,” and this may be what a paid search result looks like. Notice the bold “Ad” in the top left corner.
To land here on SERPs, you can simply pay for it. However, staying there long-term takes real work that comes from deliberate attention to SEO.
While each can have their own advantages in the short term, sustainable ROI from SEO is much more challenging as your costs will vary from period to period.
Branded vs Non-Branded Traffic
When it comes to keyword measurement, you’re able to divide SEO impact/conversions from traffic based on branded keywords and non-branded keywords that could be important for your company’s niche.
Branded keywords are the search terms you want to rank for that include your company’s name or other components that are specific to your brand. Think “Neil Patel’s blog” as an example of a branded keyword.
So, as you can probably guess, non-branded keywords cover the rest – these are the more general, non-company specific keywords that people search for on a daily basis. “The best blog about SEO” would be a good example of a non-branded keyword.
To have a wider dominance among SERPs, you want to have a healthy combination of both.
The challenge arises when trying to measure branded versus non-branded traffic.
It’s nearly impossible to ascribe one single SEO change to one single result in the future. Better SEO is the result of a combination of strategies, so it’s very difficult to try and measure the impact of branded and non-branded keywords independently.
Can’t Measure SEO Impact on Retention
We can extend the customer’s lifetime value using SEO through various content strategies, like recurring subscriptions or building tools that people can use.
However, despite the increased retention that SEO can theoretically generate, taking its impact into account when calculating SEO ROI is impossible since greater amounts of time spent interacting with content doesn’t necessarily equate to more conversions.
The ROI of SEO represents the returns on investment you generated from your SEO strategy. If your SEO campaign generates more revenue than costs, then you have a positive ROI of SEO. If your SEO campaign generates less than it costs to run, then you have a negative SEO ROI.
SEO can have a high return on investment if properly implemented. Good ROI depends on many factors, like SEO site structure, quality, industry competition, and more.
It’s difficult to determine the average ROI for SEO across all companies and industries; however, companies like Profitworks shared that it generated $2.75 for every dollar spent on SEO, meaning their ROI of SEO was 275%.
TeraKeet estimates that its average ROI of SEO ranges from 550% to 1,220%.
To calculate SEO ROI, fill in the following equation:
SEO ROI = (Gain from investment – Cost of Investment) / Cost of Investment
For example, if I paid $500 for SEO and made a return of $2,000, my SEO ROI would be:
SEO ROI = ($2,000 – $500) / $500
SEO ROI = $1,500 / $500
SEO ROI = 3
For every dollar I spent on SEO, I made $3 in return.
Fine-tuning your website’s SEO takes a lot of time and attention, but it also yields substantial rewards.
Not only will a robust SEO campaign grow your revenue, but you’ll be capturing and retaining new customers online that can support your business for years to come.
It can take months or even years to see real results, and there are plenty of pitfalls to hit along the way, like variable costs, delayed results, convoluted data measurements, and more.
Instead of just focusing on the money, develop a concrete strategy that can lead you to your SEO ROI goals.
Understanding customers is more important than chasing after results, so keep them top of mind with every consideration you make for your SEO strategy.
What’s something you’ve done to increase SEO ROI?