In a world full of 3-letter acronyms, one term rules them all: ROI.
Return on Investment is the most important metric to look at when reviewing the value of your SEO – or any of your digital marketing channels for that matter.
This is because you could have 3,000 website visitors coming through from your SEO activity every month, but the only way to know if that’s a good figure is to benchmark it against what you’re spending on SEO (and to know how much that traffic is actually worth to your business).
Sounds complicated. And yeah, it kind of is. That’s why we’re going to break it down for you right now into two steps:
- Projecting possible results (before you do SEO)
- Measuring the actual ROI (after you do SEO).
One thing before we jump in: Measuring ROI for SEO is notoriously tricky. Comparing your total conversions to your investment is fairly straightforward, yes, but that’s only the beginning. There are other factors to consider when determining the ROI of SEO, like lifetime value and UX improvements – more on this shortly.
1. How to Project Possible SEO Results
First things first, you need to know your objective. Are you focusing on traffic to your website, conversions from organic search, or on-page engagement? Identify which goals align with your overall business needs.
Based on your objective, you can work out some realistic expectations and understand which metrics are most important for you when tracking SEO results.
- If you’re keen for website visitors to engage with your content, average session time and pages per session are key metrics to watch.
- However, if your primary objective is increasing transactions or enquiries, you’ll be more concerned with conversion metrics.
Set a Benchmark
Once you know which metrics to judge success by, you’re ready to set a benchmark. If this is your first foray into SEO, this is easy – your baseline is how things were before you started SEO. Just make sure you avoid contaminating the results as much as possible (e.g. your SEO reports shouldn’t include any traffic or conversions from paid channels, unless an organic search has appeared somewhere along the funnel).
Set Up Goals in Google Analytics
Your conversions won’t count towards your ROI if you’re not recording them properly. By setting up goals in your Google Analytics (GA) account and placing appropriate dollar values on each goal, you can see a snapshot of your SEO’s basic-level ROI at any time.
Once you’ve collected enough data, you’ll be able to assign an average value per session. That is, for every 1,000 sessions (or any arbitrary number you prefer) that occur on your site, you’ll be able to say, “I can expect X conversions from this, with an average value of $X per conversion.”
Just like that, you go from tracking traffic and crossing your fingers to tracking traffic and knowing what that traffic is worth to your business. S-E-Oh yeah.
Quick note: Not every SEO benefit can be tied directly to money. Someone who finds your website organically might spend $500 on their first session. That’s great, but that same person could go on to spend thousands with you throughout their life, as well as potentially spreading the word about your business to their friends and family. This ‘lifetime’ ROI isn’t as tangible as immediate ROI, but it’s no less real.
2. How to Calculate Your SEO ROI
The most basic method of calculating your ROI is to divide your net profit by your total SEO cost and express the answer as a percentage.
% ROI = Net profit / Total cost x 100
Imagine you’ve gained 20 web enquiries this month, compared to before doing SEO, and they brought in $5,000 in gross revenue. You spent $3,000 on SEO during the month.
Doing the maths gives us this result:
($5,000 – $3,000) / $3,000 x 100 = 66.67% ROI
Simple, right? But where do you get your revenue numbers from?
Well that’s where your GA goals come into play. You should be able to pull a fairly accurate revenue number in the Acquisition > All Traffic > Channels report. This shows you how many conversions you got in any given period.
For more context, try comparing your results against the previous year.
Click on the date range picker in the top right, tick the Compare to box and select Previous Year. This will give you a useful comparison – in general, month-on-month comparisons are less useful than year-on-year, especially if your industry has seasonal fluctuations.
And there you have it: a very simple way to calculate whether your SEO is generating a positive return for your business.
Technical tip: By default, the conversions that show up in the Channels report are based on “last click” attribution, which only gives credit to the final visit when your user converted. There are more advanced ways to measure how each channel contributed, but that’s for another day.
Also, keep in mind the not-so-tangible elements of SEO, like:
- The percentage of conversions that could develop into lifetime customers (or even brand advocates)
- Technical improvements (e.g. information architecture, https, mobile-first), which improve the fundamental health of your site
- Greater user engagement and UX improvements that can flow on from SEO activity.
With these in mind, even breaking even in an immediate sense could mean that your SEO investment is well worthwhile.
Feeling a little overwhelmed? Don’t stress. Stick to these steps for now or contact us if you’d like a hand implementing them.
Or, if you’ve got all this comfortably under your belt and you want to dive deeper, you can keep on scrolling for some bonus tips.
Being Realistic When You’re the Newbie
If you’re a new business, don’t expect to quickly dethrone your established competitors. This ain’t no Game of Thrones. Rising up the ranks will take time and a sustained SEO investment.
Play a clever game by staying ahead of the curve and looking for gaps in your competitors’ strategies (you can sometimes get lazy when you’re used to being on the top!). For example, try to make the first move on things like algorithm updates and new Google features.
Pick Your Battles
Unless you have an extravagant digital budget, you’ll need to consider the point of diminishing returns. If you’re trying to reach position 1 for a wide range of competitive keywords, it’s going to take lots of time, effort, and money.
Where possible, we recommend strategically trying to raise general visibility over time across topic areas (especially areas that contain long-tail keywords). This is an effective way to increase traffic, even on a budget. Essentially, lots of small gains can trump a few big gains.
Keep Your Eyes Open
Don’t get too absorbed in your own SEO bubble – pay attention to the macro-environment. Being aware and taking advantage of factors like industry seasonality can guide your strategy to greater success.
Also, watch out for and quickly address things like:
- Existing manual penalties
- Poor onsite content
- Technical issues with your site navigation.
Particularly with things that take a while to fix, it’s best to get on them early.
For the most reliable overview of improvements, look at year-on-year results rather than month-on-month or quarter-on-quarter. This will help you overlook seasonal factors that may affect results. For example, if the product you sell is a popular Christmas gift, comparing December results to September outcomes won’t give you an accurate insight into whether SEO is improving.
Riding the Honeymoon Period
When you rapidly fix multiple SEO issues on your site, you’ll likely see am immediate upswing in results. However, this doesn’t continue forever. Once the ‘honeymoon period’ is over, this is when you need to stick to the strategy and keep making incremental improvements in order to safeguard future performance.