These two figures alone demonstrate the necessity of search engine optimization. This is why many companies invest more than $79 billion in SEO-related services yearly.
Without a strong presence in organic search, companies miss tons of potential revenue, leads, and exposure to new audiences.
But even organic SEO doesn’t come for free, and convincing decision-makers and stakeholders in your business of its worth is challenging. Notably, they’ll want to know that SEO will yield a positive return on investment (ROI) for them.
Therefore, the calculation of SEO ROI is an essential ability, particularly for consultants, agencies and even marketers who wish to integrate it into their business.
Your clients will want a concrete bottom line – solid evidence that the expense of SEO is worthwhile. This can be a challenge.
Why is that?
This is due to its nature the organic nature of SEO that there’s no dollar-based value directly tied to it. Additionally, SEO is notorious for taking an extended time to begin taking effect, with the common opinion that it takes between 6 to 12 months to begin to see a positive return on investment.
If SEO ROI calculations have you scratching your head, you’ve come to the right place.
Learn how to find out the true value of SEO.
The Basic Way to Calculate SEO ROI
In theory, calculating the ROI for SEO is no different than calculating it for any other type of business. It is simply a matter of subtracting the expense associated with SEO from your income.
Here’s the formula:
- The value of SEO conversions – SEO costs/SEO investment costs
It seems simple enough, doesn’t it? But why is there so much confusion about SEO ROI?
The main issue is determining the worth of conversions you directly attribute to SEO, which can be challenging. In general, it’s pretty easy to figure out the total value of SEO investment.
The more complicated part is determining whether a client converted due the SEO efforts or another factor. For example, it may be that a prospect spent weeks reading content about your products that they found in the organic search results.
However, when it’s time to purchase, and they click on an ad from a social media site, they will take full credit for the conversion (despite the apparent attribution that your SEO content was able to give to the sale).
Attributing conversions to marketing channels has been a controversial and conflicting issue. More on that later.
Let’s look at the most important KPIs you can use to calculate the SEO campaign’s true ROI.
Calculating how much your SEO strategy costs
While generating organic traffic through search engines is seen as the ‘free’ way to do SEO (as opposed to pay-per-click (PPC campaigns), the old economics adage rings true here; there’s no such thing as a free lunch.
Although there isn’t a tangible value in terms of dollars that comes from being ranked in the organic results of search engines, organic SEO isn’t free. Even if you’re doing your own work, you’ll still have the enormous amount of time that is required to produce regular content, make SEO adjustments and conduct keyword research.
All the SEO work adds up, so you must be aware of your expenditures.
Here’s a general cost breakdown with SEO that is organic:
If your employees are responsible for blogging, content writing, and other marketing activities, you must factor their pay into your expenses.
In addition to those directly involved in SEO, remember to mention any web designers or developers you employ for image creation/web publishing or for tweaking technical SEO.
If you contract out to an agency for your SEO services, it is important to include the annual or monthly charges you pay to the agency.
Remember to add the amount you pay to freelance developers, writers or graphic designers who assist with your content marketing campaigns.
For accuracy, be sure you include fees from software that isn’t explicitly designed for SEO but are used for SEO, such as PR software or HARO.
Link building and distribution
There are additional costs associated with distributing and promoting the content you publish. Not just that, when you pay for links, it is also necessary to include these costs.
Apart from revealing all your expenses, you’ll need to decide on a time frame to calculate. If your clients request the exact date, do your best to meet their demands. But, it isn’t a good idea to use monthly comparisons. Yet, monthly comparisons don’t work well for SEO, so try to avoid them if you can.
Find out the worth of your conversions to traffic
Now we get to the tricky part, determining the conversions you can directly attribute to SEO.
If you don’t have it, then you must set the conversion tracking feature in Google Analytics (GA) or equivalent software. Make sure you set the tracking program to use organic, not paid, search results.
This will give you the number of conversions Google believes happened due to an SEO campaign. Take note of each one to ensure you can link the reason to SEO.
Be aware that the kind of conversions and their value will vary from business to business.
For e-commerce websites, it’s pretty straightforward as they automatically send sales conversion data to GA.
But, the objective of any business can be something other than an immediate sale. For instance, lead generation companies like Lead Generation frequently struggle to nail down their conversion rates for traffic because they’re not simple and black and white. In these cases assigning a dollar value to sales-qualified leads can be used as an answer.
SEO KPIs to communicate its worth
Beyond the conversion rate of traffic aside, you can track a few particular KPIs to show the worth of your SEO campaign.
Search engine rankings
Your ranking is the most crucial KPI to pay attention to. The higher you rank, the better. Improving your rankings is tangible proof that your optimization efforts are paying off.
The number of organic visits is another method to measure the efficiency of the efforts you’ve put into it. While more organic visitors don’t always lead to more revenue, they improve brand awareness.
Note: Organic visitors can be cyclical or trending up or down, so there may be better metrics to use. For example, a summer clothing boutique will get few sales in winter, or a fashion trend might go out of style.
Your website’s click-through rate is how many people came across your organic page and then decided to click through to the landing page. A high CTR shows that you’re attracting the right people.
In addition to hard conversions (see above), soft conversions usually result in picking up a new lead.
Some examples of soft conversions are the sign-up for newsletters, social sharing and downloading of content. It is crucial to keep track of both soft and hard conversions to see the whole picture of your marketing environment as a whole.
Pages per session
An additional SEO KPI is the number of pages per session. This is the number of pages the user has viewed before leaving your website.
Several pages per session indicates that you’re engaging your audience, and that’s a great thing.
An impression refers to how often your content appeared in the search engine results. A high number of impressions is excellent for improving brand awareness.
Although these metrics aren’t related to SEO ROI, they are still proof of its efficacy and are worthy of being discussed with relevant stakeholders.
The benefits of assisted conversions
This is where things begin to get a bit complicated. It can sometimes take work to determine which marketing method is the most effective in converting traffic.
Traditionally, conversions were accounted for by the “last non-direct click.’
As stated before, your blog content does the brunt of the heavy lifting, only for a social media ad to take all the credit in the end since it was the closest click to the conversion event.
Enter assisted conversions, the primary remedy to this frustrating issue.
This method aims to give each marketing channel an equal proportion of the credit they deserve for every conversion rather than using the “last non-direct click.” method.
Visitors are likely to visit your site at any point in the buyer’s journey, and every article can impact various levels in the funnel of sales. For instance, if a potential customer is looking for details at first, your blog’s content will take the spotlight.
With some clever CTAs and product highlights, that can motivate the user to decide to move on to product pages and blogs.
And then, one day, they buy something and make it through the retargeting ads, which will be credited all the credit for the purchase. However, we know that’s not the case since the buyer has gone through a long buyer journey that was aided by your well-crafted SEO content.
If your blog isn’t receiving recognition for direct conversions, it does not mean it didn’t contribute to the sale.
That’s why the shift to a data-driven attribution model (DDA) with Google Analytics 4 took place.
Google Analytics 4 and the data-driven attribution model
Google’s DDA model uses your existing data for conversion events to attribute a conversion to multiple marketing channels.
It uses machine learning algorithms to distinguish between conversion paths and non-conversion paths.
What are they?
A conversion path is a series of touchpoints (ads, clicks, interactions, exposure, and more) that eventually leads to a conversion event. The DDA model will then attribute partial credit to each channel in the path.
Non-conversion paths are similar, but the touchpoints do not lead to the conversion of customers, and so the information is discarded.
By analyzing routes to conversion, the algorithm can determine what might have transpired that caused the conversion.
If you’re already using GA4, it uses this data-driven model by default, so the value of your conversions will already have the assists factored into the equation. You can also view an Assisted Conversions Report within Google Analytics by going to Advertising > Attribution > Conversion Paths.
Here, you can view the complete overview of what Google believes are the critical contact points for each path to conversion. These touchpoints are:
- Organic search
- Paid search
- Organic social
Each time you touch a point, you’ll be able to view the graph that shows the impact each one had on conversion at each stage in the funnel (early, middle, late, and late).
For SEO, you only need to pay attention to the organic search for each stage to see how impactful it was for each conversion.
Difficulties of Measuring SEO ROI
Despite the advancements of the DDA model, calculating SEO ROI still has many gray areas and challenges facing it.
Here are some top challenges you’ll face when determining your return from SEO investments.
SEO ROI can take a long time to show up
Time periods are a tricky issue for SEO ROI due to the nature of the work itself. Nowadays, search engine algorithms have become incredibly complex and sophisticated.
As a result, tweaks to websites and new content takes a while to materialize in search engine results. New content has to be crawled and indexed, and there’s no shortage of fierce competition out there trying to rank for the exact keywords you want.
That’s right, SEO is a long-term marketing strategy. This is why the traditional method of measuring ROI by comparing investment returns to monthly earnings does not work with it.
It can take up to six months to begin seeing returns, so calculating ROI monthly isn’t feasible for the first couple of months.
The lengthy timeline is a significant factor why SEO can be a hard sell for some, as no one wants to hear that something will take six months to start paying off. Yet, the benefits of SEO are significant once they begin, and they tend to compound with time.
It has limited testing capabilities.
The ability to conduct experiments on the efficacy of SEO is more challenging because you can’t test it as you would other channels.
For instance, if you want to test your PPC ads’ effectiveness, you can turn them off for a while and compare your revenue.
If you take it off for a couple of months and see no improvement to your bottom line, you know you’re PPC campaigns need to be fixed, and you shouldn’t invest in them anymore.
It’s impossible to do it with organic SEO since removing your site from search results isn’t something you can do in today’s age. You’d have to noindex your site for at least six months to see if there’s a change.
It doesn’t mean it’s impossible to test the efficacy of SEO. However, SEO is more limited than other channels.
Attribution is flawed by nature.
Even using Google’s DDA model, marketing channel attribution still needs to be solved and isn’t just used for SEO, either.
Some even say that the concept of attribution is useless since touchpoints are usually more complicated than the analytical software allows them to appear. As we’ve said before, a single article can be relevant for each step in the sale funnel through various customers.
Therefore, it’s nearly impossible to determine the source of the conversion.
It’s true that the DDA method is a much-needed advancement in this field. However, it could be better. For instance, there are instances of data that you will never see since the tracking code was not fired. This could be because of an ad blocker, or the user may bounce without letting the tracking program load.
There is no way to quantify retention or the impact of branding.
Lastly, SEO metrics can’t measure retention or instances where users were looking for a brand they already knew about.
On the other hand, SEO content can increase the value of a customer’s lifetime when they are regular readers.
Suppose you write regularly on digital marketing strategies and have developed a steady readership. Thus, a large portion of your blog’s visits come from your current customers or readers. While this is a significant benefit of SEO content, it’s impossible to measure.
Brand awareness is another unmeasurable factor. For instance, if a user already knows about a brand or learned about it elsewhere, SEO shouldn’t get the credit, but it will because they searched for it online.
The Most Valuable Metric for SEO ROI
Outside of using the ROI formula to calculate an actual number, there’s another better measure of your SEO campaign’s success: the visibility of your search results.
Utilizing a rank tracker, you can track the visibility of your site’s progress on a graph. If the line starts to move upward after a couple of months from the start of the SEO initiatives, you’ll be able to see proof that the efforts are making a difference.
Search visibility is similar to the share of voice; a metric marketers use to gauge their market share.
Alongside sharing your results, showing decision-makers and other stakeholders the search results will also demonstrate how efficient your efforts have been.
Closing Thoughts: SEO ROI
By now, you should know how to calculate SEO ROI and the associated issues.
Because of the nature of SEO, It’s difficult to quantify its effect on your bottom revenue. Optimizations for technical SEO, enhancements to user experience and helpful user content all have difficult-to-quantify results yet are definitely real.
If you can calculate your traffic conversions and subtract the expenses for investment, you will find your SEO’s ROI. It’s also recommended to correlate this number with particular KPIs, like rankings. This will give your customers and others a more precise overview of the overall picture.
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