How to Measure the ROI of SEO.
“How do I measure the ROI of SEO?” is one of the most common questions we get when pitching to clients. So, we figured we’d write a post about how to do just that.
Before we dive into the nitty-gritty of ROI measurement, let’s break down the two key phrases of that question – ROI & SEO.
ROI means Return on Investment. It’s the amount you get back from how much you’ve invested.
SEO means Search Engine Optimisation. We’ve already written a post about what SEO is.
Now that we’ve got that out of the way, let’s get into it!
Why is measuring the ROI of SEO important?
This stat is a little old (it’s from 2020), but it still stands up – according to BrightEdge, 53% of traffic to a business website is organic traffic. And, as you know, organic traffic comes from search engines, which are influenced by search engine optimisation.
That means, if we don’t measure the ROI of SEO then 53% of traffic, and potentially sales, are not being attributed to any marketing channel.
Without knowing the ROI of all marketing channels, it is impossible to know which channels are performing best and where to invest time, money and resources to scale up your marketing.
How to Measure it.
The actual formula is easy.
SEO ROI = (value of organic conversions – cost of SEO investment)/cost of SEO investment
To calculate, we need to know, (a) the value of organic conversions and (b) cost of SEO investment.
We’ll start by calculating the cost of your SEO investment.
To do that we’ll break the costs into four categories:
In-house teams – count the time dedicated to SEO & content creation (include developer time and time uploading articles)
SEO freelancers and agencies – if you use any external SEO resources, include their price.
SEO tools – count all subscriptions for dedicated SEO tools (any tools that aren’t solely dedicated to SEO can also be included, if you’d like.)
Content distribution and link building – include any content promotion efforts and any links you’ve bought (not something we’d suggest but, if you are doing it, then you need to include the cost).
Add this all up into a monthly price and a yearly price.
If you’ve got proper conversion tracking set up on Google Analytics, then this next part should be a breeze.
To find the value of your organic traffic, head to Google Analytics and segment your traffic to organic only. Check the value of conversions.
No conversion tracking set up?
Not all hope is lost. But the value at the end is more of a rough approximation — and it takes a few more calculations.
Find number of conversions in a given period.
Calculate average conversion rate as close to the conversion page as possible.
For example, if you can track the number of people that land on your product page and the number of conversions you have, then you can divide number of conversions by traffic and times by 100 to get your conversion rate.
Times the conversion rate by organic traffic and this’ll give you a rough idea of the number of conversions associated with SEO.
Times this by average order value of all of conversions.
You now have (very roughly) the value of your organic traffic!
Challenges with measuring the ROI of SEO.
Calculating the ROI of SEO is not all good times and happy memories. There are some significant challenges to keep in mind.
Marketing attribution is inherently flawed.
Chances are your Google Analytics account is set to last-touch attribution, which associates all conversion value to the final touch. This doesn’t consider all the steps a customer takes prior to the conversion that leads to them converting. There are other attributions models, but each have their pros and cons. Also, tracking all points of interaction with a brand across a customer journey is basically impossible. If someone saw a cool video on your blog and then sent it to a friend on Slack, who watched it and later searched your company, there is no tracking able to sort that out. Google Analytics 4 uses a data-driven attribution model, which does help with the first situation.
The time between investment and return.
This is a biggie. When looking at a single month of investment and return of SEO, it’s hard to gather a good overview of the ROI. SEO results can take months to years to start making a return. So, do you report ROI years later? Or report on a per-content basis that ignores technical SEO?
FAQs about measuring ROI for SEO
When to measure?
We’d recommend measuring on a monthly, quarterly and yearly basis.
This will give you a good overview of how SEO is driving revenue.
How do I measure?
Use this formula to figure it out:
SEO ROI = (value of organic conversions – cost of SEO investment)/cost of SEO investment
So, to calculate we need to know, (a) the value of organic conversions and (b) cost of SEO investment. (Take a look above to go back over more info on this.)
What is a Good SEO ROI?
It really depends on your industry, which is not the answer you want to know.
Based on reported data, a good ROI for SEO is between 5x and 13x (500% and 1300%). That means, for each $1 you invest, you will (hopefully) get between $5 and $13 back.
How long does it take to see ROI from SEO?
SEO is a long-term strategy — that means you might not see results for 3-6 months (or even a year!) but, once you start to see traction, the growth can be exponential.
Many clients like to measure their ROI for themselves. Many like to leave it to us.
We’ll leave it with you!