Proving the ROI of SEO
With organic search accounting for over 50% of all site traffic, it has never been more relevant for businesses to understand how their website is performing and the actions they can take to generate more organic clicks – and increase conversions from search traffic.
How can you prove the ROI of SEO?
As a digital marketer, you know the business value of SEO – it’s your golden ticket to improve organic visibility. Considering that 75% of users never scroll past Google’s first page, there’s not much worse than being buried deep in search results. If you fail to rank on Google’s page one, the missed opportunity to drive bottom-line revenue will be tangible – 91.5% of all traffic is generated by clicks on websites listed on Google’s first search results page.
But you also know that at first glance, SEO can be intimidatingly complex. A lot of planning and resources go into the initial groundwork, and once your SEO strategy is set up, results don’t immediately translate into organic revenue. Selling decision-makers and stakeholders merely on the self-evident value is not enough to justify continued investment in SEO – and while you can monitor traffic, conversions, search engine rankings, goal completion, and others SEO metrics, you will need to demonstrate return on investment (ROI) to determine the true value of your organic search initiatives.
So how can you prove your SEO strategy is able to supercharge your growth and drive ROI?
We will walk you through step by step how you can calculate the ROI of SEO to show the true worth of your search engine optimization efforts.
What is ROI of SEO?
Consider ROI your best friend – it helps you put the financial value of your digital marketing efforts into perspective.
Calculating ROI is a straightforward task if you’re measuring return of investment for Pay-Per-Click (PPC) advertising. As with PPC you pay a defined amount for each click on your ads, you can easily put an exact figure on the investment across a certain period. Typically, PPC cost involves the amount you’re being charged per click, plus the cost of your internal team managing your PPC campaigns (or agency fees in case you have outsourced paid search management).
Calculating ROI for SEO is a little more challenging.
Unlike PPC, there is no fixed cost per organic click for SEO – rather than buying the front row seat, SEO is about earning organic visibility on Google and other search engines. So while digital channels can guarantee a certain amount of traffic for a certain amount of money spent, it isn’t possible to directly measure the impact your SEO efforts have on organic revenue generated from search traffic.
By definition, ROI of SEO calculates the return of investment from your SEO efforts. A site will have a positive return of investment if the organic revenue generated by your SEO campaigns is higher than their cost. SEO is no quick fix tactic, though – remember that SEO is all about building up your bottom-line, so expect that your SEO initiatives won’t deliver a positive ROI overnight. It’s a long-term strategy.
When you consider ROI, you look at how much you’re investing and how much you’re getting back. While anticipated ROI is a prediction of the profit an SEO campaign is likely to generate based on estimated costs, revenue, and other assumptions, the actual ROI is the true return of investment derived from that campaign.
How can you calculate the ROI of SEO?
In concept, calculating the ROI of SEO is very similar to calculating the ROI of any other type of business investment. All you need are two numbers: What you put in (cost), and what you get out (gain).
- SEO cost: The amount of money you spend on your SEO campaigns.
- SEO gain: The amount of money you get back from your SEO campaigns.
The cost of SEO
Let’s look at the cost for SEO first. How much you need to budget for your SEO efforts depends on a few factors – whether you manage your SEO in-house or work with an agency, and the kind of technology you use to support your SEO strategy.
- If you use an SEO agency: While the cost of SEO services varies greatly depending on what’s included, most packages come with a fixed monthly fee, which makes it easy to calculate your expenses as you don’t have to break down costs.
- If you manage SEO in-house: In-house resources are easy to tally up if one person or team works on SEO full-time. If your content creators, digital marketers, developers, etc. work across multiple teams and SEO is only one of their many tasks, they need to track the time they effectively spent on SEO so you can put a figure on your SEO expenses overall (based on their hourly rate).
- Technology: It’s likely you use some sort of software, tool, etc. to execute your SEO strategy. Include any of these costs in your SEO calculation (if you share the software across teams, factor in a percentage of the cost that seems adequate for your SEO work).
SEO key performance metrics
Now on to the bright side of SEO ROI – the gain. To determine whether your SEO strategy is successful, you need to measure the organic performance of your website.
Key Performance Indicators (KPIs) are vital to your SEO strategy. Here are several that you should keep a close eye on to ensure that your efforts are paying off:
- Search rankings: The higher you rank, the better. It’s critical that you monitor how you rank for key search terms over time as it directly reflects how successful your SEO strategy is.
- Organic traffic: This KPI tracks how many visitors come to your website (homepage) and key pages from organic search results.
- Bounce rate: A user entering your website and leaving without performing any action is called a "bounce", indicating that the visitor is not engaging with the content on your website. While high bounce rates can have several reasons and typically hint at technical SEO issues, your observation should be granular – if a specific page satisfies its intent (users find the information they need and leave again), the “bounce” is not due to poor website performance.
- Organic CTR (click-through-rate): CTR measures the ratio of users clicking on your website because you showed up in Google’s search results to the total number of users who viewed the search results. A high CTR indicates that you have targeted the right audience with a website that is appealing enough for a high percentage of users to click on the link.
- Soft and hard conversions: Hard conversions can be contact form submissions, phone calls, demo sign-up, etc. and are typically considered the traditional types of conversions – they show clear intent. Soft conversions indicate clear interest – newsletter sign-up, content download, social shares and likes, etc. While it’s natural to tend to focus on hard conversions, you should keep the two in balance – as soon as visitors enter your marketing ecosystem, engage with your leads and follow up.
- Site speed: Site speed is a ranking factor – improving the loading speed will help enhance user experience and increase organic performance.
- Pages per session: Pages per session is the average number of pages visitors view during one session. Contrary to bounce rates, a high number of pages per session means that users are engaging with the content on your website.
- Organic impressions: How many times has your website been seen for all search queries performed? Tracking organic impressions can help measure an improved “brand awareness” for key search terms.