HOW TO CALCULATE THE ROI OF YOUR SEO
There is a way to calculate the return of your SEO investment and luckily it’s not too tricky.
But the calculation is different than, say, calculating ROI for media buying.
It is easy to compute for the ROI for media buying: You buy traffic from Google or Facebook for X number of dollars and you get a certain amount of traffic.
The ROI is clear. You can use this simple formula for your paid ad campaigns:
ROI = Sales Growth – Paid Ad Cost Paid Ad Cost
If your sales grew by $10,000 and the Facebook ad campaign you spent was $1,000, your ROI is 9%.
It’s different with Search Engine Optimization.
We are not just talking about dollars when we speak of ROI from SEO. Although we are expecting sales, a dollar amount might just be one of the metrics.
The ROI of your SEO shouldn’t be calculated month to month. Think long-term. It has to be approached similarly to a project or a campaign with a long-term business results or returns.
SEO does not always produce instant results—especially in the first couple of months—but that doesn’t mean it isn’t working.
To use an analogy, SEO is like constructing a building. You may have built the foundation or the structure, but you can’t move in until it’s done. But later, once construction is completed, you can enjoy the property for a long time to come. And, you may have to reinvest later on to make improvements.
There are two things you need to understand and remember when measuring your SEO campaign’s ROI:
Conversion is a very important factor to consider for the success of your SEO campaign.
In a broad definition, conversion is the term used to describe a website visitor completing a goal. The goal could be purchasing a product or signing up for a consultation.
The website’s conversion rate is the number of times a visitor completes a goal, divided by the total traffic coming in to the website.
First figure out your keyword search volume and your website traffic. From there, you should understand how much of the traffic is turning into leads… and into business.
Let’s say you have 1% conversion from your website traffic, find out how much business that 1% is bringing in.
If you don’t know the numbers, the best approach is to speak to an SEO expert who can help.
Value for your business
SEO brings more value to your business, which your company can enjoy for an extended period of time.
With PPC, you are seeing and getting the results while the campaign is. SEO, on the other hand, lets you enjoy the benefits even after the SEO campaign is over.
By having your website organically ranked, you can build an inbound lead generation system for qualified leads that will bring you higher conversion rates based on your goals.
SEO traffic has a higher conversion rate than paid media. The reasons are:
It builds trust and authority to your website.People trust what Google favors in their search engine results.Visitors take more time to look at your website.Visitors engage with your business more.
If you are thinking of selling your website, a well-ranked website is definitely more attractive.
Set up your business goals
To measure the returns on your SEO investments, your company has to define the goals you want to achieve.
For an ecommerce business, the business goal is to get people to buy your products. For a technology company, it might be getting visitors to sign up for a demo or request a consultation.
You can configure Google Analytics based on your business goals. Goals can be applied to specific pages of your website and every goal can have a monetary value.
The Analytics tracks a visitor who performs an action based on the defined goal and records it as a conversion.
Google categorizes the goals into 5 types.
Measuring Your SEO Campaign’s ROI
Google Analytics makes it easier for an ecommerce sites to calculate the ROI.
But since all businesses are not created equal, it doesn’t work the same for non-ecommerce websites.
For some websites, determining ROI per customer may require you to consider the Lifetime Value of your Customer less Acquisition Cost.
However, for other businesses, ROI can be computed based on the goals set. Your goals could be based on appointments made or signups for an online course.
To compute your ROI, Google Analytics requires that you assign a Dollar Value to your goal.
The best way to see the success of your SEO efforts is to calculate your ROI.
Unlike paid media, SEO ROI is different, because you have to consider different metrics. Primarily, you need to think of: (1) your Conversion Rate, and (2) its worth to your business.
Defining the goals you want to achieve is very important.
Google Analytics has proven very helpful in computing the ROI, not only for ecommerce, but also for the goals you’ve set.