In the high-tech competitive world, growing an online business can be tough. One of the biggest challenges online marketers feel is investing and generating ROI. Any professional marketer or a marketing team understands the significance of budget planning i.e., to generate efficient ROI.
As with any marketing investment, SEO activities demand ROI calculating. Whether you choose to invest internally or externally you need to find whether the generating value is positive or negative.
However, most often marketers fail to calculate the ROI of their SEO in the right way. The process ends up at KPIs tracking which is to determine traffic or ranking.
In this blog, we will explain to you the right approach to calculating ROI for your SEO activities and make you aware about its significance and other details.
Why is it so important to find the ROI of SEO?
No online marketer would deny the power of content ranking on search engines. As per the Bright edge 2019 report, paid B2B, as well as others, generate 70% of the revenue through paid and organic search on Google.
SEO helps businesses reach higher ranking through keywords that are relevant to their audience and fit the business persona. SEO can offer big returns when implemented with the right digital marketing plan.
Hence it is critical to know the actual value SEO is providing to your business. While KPIs of SEO like measuring sales and traffic is essential, your campaign success is determined with a positive ROI.
When you are able to track the real value you generate from every dollar of your investment, it will help you create a better marketing strategy and scale growth.
How to Calculate SEO ROI?
When it comes to calculating ROI there is no one working formula, different companies have their own way of starting and analyzing. This article briefs you about a general way.
ROI of SEO is a three-step process that can be stated as what to do before, during, and after.
Step1: Define your plan
Step2: Track Conversion
Step3: Calculate ROI
Step 1: Define your SEO Plan
The starting point of ROI calculation is to understand your SEO plan. What are you going to incorporate in strategy and the different type of investment you are likely to make for your audience?
This is a simple yet critical aspect of ROI calculation that many businesses fail to get right. The reason is that they do not know enough about SEO. SEO is not only about optimizing keywords on websites or hiring agencies for content release. It is much wider, often with minor vital elements like tech automation tools or investment professional content creators, etc.
If you don’t have deep knowledge regarding this field, hiring a digital marketing agency will make your work easier. Such agencies offer a completed package with a fixed cost which will make monetizing very convenient for you.
However, if you choose to do SEO by yourself, create a note of everything that you invest including both direct and indirect investments.
Define major SEO investment resources
If you are new to SEO and don’t know much about SEO resources, here is a glimpse of some major SEO channels that the majority of businesses choose to invest in
In-house SEO resources
In-house resources are hiring SEO executives for the company. These employees will work majorly on your website SEO, their work role includes creating SEO optimized content, research, guest post and so much more.
This includes every employee that is involved in SEO work some or the other way like a fresher SEO executive, SEO manager, writer, developer, researcher, proofreader, and more.
No doubt, tracking investment on employees partially committed to SEO work is complicated in comparison to those who work solely on your company’s SEO. But don’t worry if you have team members that fall in the second category, here’s what you need to do.
First list down the approximate time (in percentage) these employees spent on SEO work. Next, multiply that percent with their respective salary. If you have many such employees add the result that is your in-house SEO investment.
For example, if an employee spends 20% of his time on SEO work and his salary is $40,000 then the SEO investment on that staff is $8000.
SEO agency resources
Many organizations prefer choosing SEO agencies for their SEO needs partially or completely. Even though the hiring modules of these agencies can differ it is very convenient to track payments. The expenses are majorly calculated based on the tasks or a fixed monthly rate. Some companies do like to have a mix of in-house and agency SEO.
With this high-tech digital era, everyone likes to make their work a little automated and convenient through digital tools. Generally, companies invest in one or two teams to improve efficiency.
Note that some of such tools may not be limited to only SEO work. In such a case, you can calculate the investment through the same percentage formula we used above for in-house employees.
Step 2: Track KPIs and Conversion
Once you are ready with your SEO plan, set your monitoring game.
Here are some most used SEO KPIs that will not only help you track your performance but also your investment value.
- Search Ranking
- Organic Traffic
- Average session duration
- Bounce rate
Over time, when you monitor the above metrics you will know about your process like what’s affecting your success and what’s not. You can track leads as well as the ratio of users who are likely to convert.
Track your SEO conversion
Once you are aware of the investment value you put in for SEO, the process of ROI calculation becomes smooth.
After SEO investment calculation, the next step is to track the ROI conversion value.
The approach of tracking ROI conversion varies for different websites. For instance, the approach to track conversion on e-commerce is different from that for lead-generation websites.
Google analytic is one efficient tool that comes to your aid for the simplified approach of knowing business revenue from organic search.
Tracking eCommerce Conversion
One of the easiest ways to track your eCommerce data is through Google Analytics. So, if you have set up your store on Google Analytics your work is half done already, and don’t worry it’s very easy to set up.
Once you start tracking eCommerce data on your site you will be able to access an eCommerce overview.
With Google analytics data tracking you will have all the relevant information of sales and purchases.
This process of data collection through Google Analytics does not only help in knowing SEO ROI but also the overall success of your business. Hence you must collect data for eCommerce even if you are not thinking of tracking SEO ROI at the moment. The more data you collect the better you will be able to analyze the progress.
Conversion for Lead-generation
For a business that functions on lead, it’s a little difficult to calculate the conversions. That’s because conversion value can not be easily determined on a site like eCommerce. For lead generation websites, the conversion may happen off-site or in some cases, not even turn into payments.
However, there is an efficient approach to finding the ROI of these websites, i.e., to assign a cost value on the sales on the basis of your past conversions, below instructions show you how:
- Open Google Analytics, click view and then click Admin.
- Apply this step for all your SEO goals life submission, free quotes etc. You can also use set goals for phone calls conversion with a call tracking set-up.
- Fill in all the details in the section with an estimated value. Note that, even though these values are estimates, you will figure out the closet conversion value by some time.
- Use the formulas mentioned below for your estimated goal value.
Estimated Sales Value
Mention the percentage of leads that convert into paying customers. For example, if you get 30 customers out of 100 leads then your goal conversion is 30%.
Average customer spent
The value most of your customers spend on your service. For instance, if the majority of your converted leads spent $300 on your company, that is your average cost value.
Average lead value
The value of a lead is determined by dividing the total conversion value by the total number of leads. For instance, if you have 30 customers who spend $300 with your company, you have made $9000. So with 100 leads your average lead value will be $90.
Step 3- Calculate Your Return on Investment
After you have collected the data you need to do one last calculation i.e., to find the overall ROI for your SEO. The good news is that with the above data the calculation becomes super easy.
All you need to do is follow this simple formula:
Conversion cost – Investment cost / cost of investment
For example, you spent $3000 on your overall SEO for a month and received the outcome of $20000, apply these to the above formula
Put these figures into the formula above and we get:
($20,000 – $3000) / $3000 = 0.3
Through this formula you can calculate ROI for any site for any period, all you need is to track the cost and returns as we did in this blog.
What’s the average period to see SEO ROI?
The tenure for SEO ROI is affected by multiple aspects. Below are a few examples of the activities like the ones mentioned below:
- The specific goal your company expects from SEO activities.
- The overall amount you spent on SEO
- Your approach for content optimization
However, the average ROI generation begins with 3 months up to 6 or 12 months when considering big results.
However, that will not always be the case. To get optimal results, you must regularly monitor and analyze your results and improvise your strategy accordingly.
You get constant opportunities to come on the first page, the focus must be on elevating your content creating and keyword optimization regularly.
Why invest in SEO?
SEO is a highly used and efficient digital marketing strategy that the majority of online businesses use to gain an online presence or elevate their existing visibility.
SEO simply means optimizing content in a way that gets the attention of potential audiences who are likely to convert leads. SEO is basically laying a foundation of lead generation or creating an automated process, so the customers reach out to you and not the other way round.
The worth of SEO investment for the company is high for two main reasons: one it boosts brand value by gaining more visibility and high ranking on Google, second it gets the opportunities of engagement, lead, and conversion.
SEO investments are long-lasting which means they will keep generating results in progressive years.