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SEO ROI (search engine optimization return on investment) is the amount of profit your business can generate from an investment in search engine optimization.
Compared to other digital marketing tactics, SEO can offer incredible returns. For example, The average ROI for ecommerce SEO is $2.75 for every $1 spent or about 175%.
SEO is worth the investment, according to the numbers. Here’s what you need to know about SEO ROI: How to calculate it, how it compares to other marketing tactics, and what to expect if you’re investing.
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What is SEO ROI?
SEO ROI stands for “search engine optimization return on investment.” It refers to the amount of profit your company can generate when you invest in SEO.
SEO campaigns are a powerful method of lead generation and sales and have a dollar value that is almost always higher than other forms of digital marketing, as the statistics below show.
SEO starts with keyword research designed to target keywords that don’t necessarily have high organic search traffic but rather have a high monetary value.
When paired with a content marketing strategy, SEO can increase website visitors, especially visitors who are potentially interested in your product and in making a purchase.
Why track ROI?
ROI, in general, is a critical metric for all businesses to track. The reason for this is simple — if your SEO efforts aren’t generating revenue, they’re not worth investing in.
The same can be said for any form of digital marketing. If you’re investing in email marketing but not seeing a return on that investment, is it really worth investing in? Of course not.
But how would you know? The only way to be sure is to track every dollar spent and connect that to revenue.
This usually means that marketers have to track conversion rates and connect each conversion to a specific marketing channel. This strategy is particularly valuable for an SEO agency because it can prove your value to a client. If your SEO services are producing not just traffic but leads and sales, the decision to continue your partnership is straightforward for a client to make.
Of course, ROI tracking isn’t just for agencies. Any marketer can (and should) tie SEO to bottom-line metrics. This involves tracking organic traffic through critical pages on your website designed to convert. With tools like Google Analytics, you can uncover how visitors progress from SERPs through your pages to affect KPIs like leads and sales, which can spell out the ROI of your SEO campaigns.
SEO ROI helps with strategy and optimization
Tracking your ROI can guide your strategy. It also helps you optimize your SEO efforts.
For example, let’s say you have a landing page optimized for a specific keyword phrase, but you’re not getting the organic search traffic you expected.
There may be something wrong with the page that’s leading to a poor user experience. Maybe there’s something wrong with your mobile site. Maybe your page speed is too slow. It could be that you’re a victim of keyword cannibalization. Or maybe you don’t have enough backlinks.
It’s impossible to know what the problem is if you’re not looking at the ROI of that landing page. It’s impossible to even know if you have a problem if you’re not tracking how much revenue that landing page generates.
That’s why tracking SEO ROI is so important — it guides your strategy and shows you when it’s failing or when it’s not as high as it should be and guides your efforts at optimization.
What is the ROI of SEO compared to other channels?
Many people are wary of investing in SEO because results take time to manifest.
In fact, it’s estimated that SEO can take 4–6 months to generate any results at all.
This often pushes people away from investing in SEO to more immediate traffic sources, like search and display ads.
That being said, there’s a reason so many companies invest in SEO. Over 60% of marketers say that inbound marketing (SEO combined with a content marketing strategy) is their highest source of quality leads.
SEO is sustainable. It takes some time to get going, but once it does, SEO is a channel that can generate results for years to come with little ongoing maintenance. What’s more, the results of your SEO efforts can even compound over time.
There’s a kind of snowball effect. Once you start generating organic traffic and positive KPIs as people have a good experience on your site, Google will take this as a good sign and reward you. This can result in you moving even higher up in search engine rankings, boosting traffic and sales even further.
With other forms of digital marketing, like PPC (pay-per-click) advertising, as soon as you stop spending budget to purchase ad space, that traffic also stops.
SEO is the choice of marketers whose focus is growth over a longer time frame. Customers acquired via SEO are more loyal than ones acquired through other marketing channels. Loyalty translates to higher customer lifetime value, and in turn, revenue and profit.
Here’s how SEO compares.
SEO ROI statistics
Compared to many other marketing channels, SEO is often far more effective in the long run at helping a company achieve its marketing goals and generate a significant return on its investment.
The value of SEO cannot be overstated. In almost all comparisons, SEO is a better investment than other forms of marketing.
Here are some statistics to consider:
- A study that Google cites has found that, for every click on an advertiser’s Google Ad (PPC), they will get 5 clicks on their organic search results — a 5:1 ratio — meaning that SEO is about 5 times more effective at getting clicks than Google Ads (basically, SEO has a much higher click-through rate (CTR))
- For some industries, over 40% of revenue for a business is captured through organic traffic.
- Social media pales in comparison to SEO — it was found that SEO drives 1,000% more traffic than organic social media.
- The average ROI for ecommerce SEO is $2.75 for every $1 spent, or about 175%.
- The only other form of digital marketing with a comparable ROI is email marketing, which has a 122% ROI (compared to social media or paid search with around 25% ROI).
- Direct mail also offers only a 29% return on investment, making SEO a far better investment.
- Conversion rates for SEO are not quite as good as email marketing — about 2.5% of visitors from search engines make a purchase compared to 4.25% of email marketing visitors (and only 0.6% of social media visitors).
- SEO and word-of-mouth marketing go hand-in-hand — 88% of people trust online reviews as much as they trust recommendations from personal contacts. Online reviews that show up in rich snippets that include your reviews can increase your revenue from organic traffic by 677% — SEO efforts generate rich snippets.
- Over time, SEO increases customer acquisition significantly over Google ads.
- 3-year averages for SEO ROI range from 317% to 1,389%, depending on the industry.
How to calculate SEO ROI
ROI calculations are actually simpler than you might think. Here’s how they work.
Calculating SEO ROI
The formula for calculating ROI is straightforward:
ROI = ((Profit – Investment) / Investment) X 100
This is a little abstract, so here’s an example.
An example of calculating SEO ROI
Say you invested $1,000 in SEO.
Then say your revenue generated by your SEO efforts was $1,500.
Using the calculation above, it would look something like this.
ROI = ($1,500 – $1,000) / $1,000) X 100 = 50%
Proving SEO ROI
The problem with proving the ROI of your SEO efforts is that it can be difficult to get the numbers together.
Sure, the calculations above are simple, and it’s easy to find out how much money is being spent on SEO (your investment), but how do you determine revenue?
This is a little tricky. The main output of many SEO efforts is website traffic. You optimize a piece of content, like a blog post or a landing page, and ideally, you should see traffic to that page rise over time.
Getting that website traffic to convert is how you get a return on your SEO investment, so if you’re going to determine your ROI, you have to first figure out what a conversion is worth.
Proving SEO ROI with sales data
Generally, there are two types of conversions that a business will shoot for — leads and/or sales.
This depends on the type of business you’re running. If you have an ecommerce business, you can determine the value of a conversion relatively easily — how much is the product worth in terms of gross revenue generated?
For example, let’s say you sell 10 products on your website that generate $100 in revenue for every purchase, and your site-wide SEO costs are $10,000 a month. If you sell 200 products a month (and you don’t have any other digital marketing efforts in place), your calculation of SEO ROI will look like this:
ROI = (($20,000 – $10,000) / $10,000) X 100 = 100%
That’s a simple calculation… as long as no other digital marketing efforts are in place.
If there are other digital marketing efforts in place, you have to separate what those other efforts are generating in terms of sales from what your SEO efforts are generating.
Proving SEO ROI with lead data
For a lead-based business or a business that generates leads and sales, it’s a little tougher. You have to determine what a lead is actually worth — and not necessarily a lead that converts, but a lead in general.
You also have to determine what counts as a lead. It might be someone signing up for your email list, filling out a contact form, or scheduling a demo. You then have to determine how the value of each lead differs.
Once you’ve done that, you can start to assign dollar values to lead generation.
For example, if you collect 100 leads, and on average, your conversion rate is 10%, then you have to figure out how much a single lead is worth on average.
If a conversion is worth $1,000, then for every 100 leads at a 10% conversion rate, you make $10,000.
If you divide this by 100, then each lead is worth roughly $100.
You then plug that into your calculations. You determine how many leads your SEO efforts to generate, convert to dollars, and then plug it into the calculation. Say you invest $10,000 monthly into SEO and generate 1,000 leads a month. It would look like this:
ROI = (($100,000 – $10,000) / $10,000) X 100 = 900%.
How to use Google Analytics to calculate SEO ROI
Google Analytics has several functions that can help you calculate your SEO ROI.
First, you need to set up conversion tracking in Google Analytics. For an ecommerce business, this is straightforward because you can set exact amounts that each conversion is worth.
If you follow the process above, you can create goals in Google Analytics and assign them the values you’ve come up with for lead-based businesses.
There are several presets that you can choose from Google’s templates, making the creation of goals relatively easy when you’ve determined a goal value already:
You then have to link leads to SEO efforts, so you’ll want to look at some statistics under the conversion tab. There’s lots of actionable data there, like:
- Product performance
- Sales performance
- Time to purchase
If you have a lead-based business, you’re going to want to use the “Goals” tab to see how your pages are performing:
You can also compare other metrics to see — for example, how your conversions compare to the organic traffic that your content marketing and SEO efforts are generating:
This last part is critical to determining SEO ROI.
Because the main output of SEO is organic traffic, to determine ROI, you have to tie these goals specifically to the traffic being generated so that you can say it was SEO that resulted in these goal conversions (rather than something else). Google Analytics allows you to separate traffic sources to determine how they affect KPIs on your website.
- You spend $10,000 a month on SEO.
- You get 100,000 pageviews a month on your website.
- You get 10,000 views a month on a critical landing page that has been optimized for search.
- Each conversion on that page is worth $100.
- You get 10 conversions a month.
To determine your SEO ROI for that landing page, you’ll first need to separate the traffic the page gets compared to the website’s total traffic and determine how much you’re spending to get it.
In this case, $10,000/month for 100,000 pageviews can be simplified to $1,000/month for 10,000 pageviews.
Now, determine the revenue generated — 10 conversions/month at $100 each is $1,000/month.
Plug this data into the ROI formula:
ROI = ($1,000 – $1,000) / $1,000 X 100 = 0%
In this case, you’re not making any profit from your investment — every dollar you put in is a dollar you get out.
While this case isn’t common in SEO, it’s a good example because you’re able to determine, based on the SEO investment, that this particular page isn’t generating the revenue that you want it to.
This means you might need to change the page — optimize it, overhaul it, maybe even remove it — adjust your SEO strategy, or even consider hiring a new marketing agency.
You could only know that by using Google Analytics (and other tools like it) to determine what percentage of your organic traffic can be tied specifically to these goals.
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Your SEO investment has the potential to boost your website traffic, generate highly positive ROI, reduce bounce rates, increase conversion value, and overall, make your firm more revenue.
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