SEO isn’t for everyone, but for the right business it can be huge.
Estimating the return on investment (ROI) of Search Engine Optimization can be difficult, particularly for individuals with little to no experience in digital marketing. This article will outline key ways you can track and measure both SEO ROI and SEO progress whether you are going with a DIY approach or hiring an outside agency. So let’s jump right in –
It may seem a little bit counterintuitive for the first step to not have anything at all to do with SEO, but bear with me.
Every business is different. If you are running an e-commerce store the value of each page visit and conversion is going to be measured very differently than if you are the marketing lead at a B2B SaaS company.
You need to understand key metrics around your current prospects before endeavoring to estimate the return on investment an SEO strategy could bring. Some key questions to ask:
The second step to identifying the return on investment (or potential ROI) of an SEO strategy involves understanding your unique industry.
If you are a B2C e-commerce store, people may purchase after one to two visits on your site but the overall customer lifetime value is going to be much lower than a cybersecurity SaaS company.
Once you’ve answered the questions outlined in Step 1 (or atleast estimated them) you need to use an SEO tool. We recommend Ahrefs, to identify keywords that are used in your industry.
If you aren’t sure how to start your keyword research, ask yourself what you would search to find your product. If you are selling hand soap it might be “hypoallergenic hand soap for women”. If you are selling compensation management software it might literally be “compensation management software”.
If you don’t want to spend the money to use keyword software like Ahrefs, you can also set up a free Google Ads account and get your keyword search volumes that way. Set your Google Ads account to the full version (not the turnkey local business version), click on the tools button and then on keyword planner.
From there you need to click on “Get Search Volume and Forecasts” which will enable you to begin typing in keywords and getting search volumes. This is more accurate than Ahrefs and other tools so you aren’t at a disadvantage if you choose to go this route.
The math isn’t too hard – I promise – but it is important. First sort your keywords into “high intent” keywords and “informational keywords”. An informational keyword might be something like “10 benefits of using hypoallergenic hand soap” while a high-intent keyword might be “hand soap for sale”.
Add up the search volumes of your informational keywords and your high-intent keywords. Now, you are going to use that conversion rate data you came up with earlier to estimate the ROI of an SEO campaign. Multiply these by the conversion rates for visitors who land on your informational pages, and by the conversion rates of people who land on your sales pages. An idea of the number of additional sales you can make should start to take shape.
Let’s say your page ranking for hypoallergenic hand soap went from #10 to #1 and started capturing 2,800 visitors per month from the 120 you capture right now, and let’s assume you have a 2% conversion rate from visitors to sales. That would increase your monthly sales from 2.4 (averaged) to 56 bars of soap sold. We can express this formula as:
Conversion Rate * Estimated Traffic = (.02*2800) = 56
But let’s take it one step further. Say you want to figure out not just how many sales you would make but how much revenue you would make both immediately from those sales, but more importantly over time. This is where our customer’s average life time value comes in. This metric captures not only the immediate sale, but also future revenue from repeated sales to the same customer.
Let’s say you’ve discovered your average customer life-time value is $254.68 from repeated purchases. You can then multiply this number by the number of sales you would expect to make to come to a better estimate of just how much each of those additional page views are worth to you. By doing this you can arrive at:
When you write content, that content stays with your company and adds value for the entire lifetime of the organization. Remember that search engine optimization isn’t a one time strategy that will stop working when you stop paying. While it is best practice to continually maintain SEO, add content to your site, and optimize for conversions, initial investment does pay off over the long haul and it is not necessary to keep an agency around indefinitely.
When creating estimates and focusing your efforts on understanding the ROI of SEO take the time to build out models for 1, 2 and 3 years. This can help you understand whether the approach will pay off over time for your organization.
This is either going to be the easiest step or the most difficult step depending on how you approach it. If you have an agency that has presented you with a content strategy, expected rankings, and associated cost it can be easy to quickly determine the return on investment of the strategy. However, if you are planning a DIY approach or have an agency that isn’t willing to provide exact estimates it can become extremely difficult.
If you have worked out the value of a page view to you, you can easily begin to see whether pursuing an SEO strategy makes sense for your organization. If an agency believes they can get you to 20,000 visits a month, but a page visit is only worth $1 cent and the agency charges $6,000 per month for the work, it is likely that you would be better off spending money elsewhere.
Conversely if you are selling software for $50,000 annual subscriptions, a page view is worth $20 and an agency believes they can get you to 10,000 high intent views a month it’s literally a no brainer.
If you are planning on doing the SEO yourself (building backlinks, creating content, and optimizing the site) it is important that you track your hours. First identify what you would charge an outside client per hour.
Then measure the direct costs (such as paying for links, software etc) that you use as part of your SEO approach as well as the indirect costs (time optimizing pages and creating content). This can enable you to come up with a rough approximation of your costs and compare it to expected results.
You’re never going to be able to estimate the exact return on investment that an SEO strategy creates. The best you can do is identify rough numbers, and discover whether it is the right fit for your organization. Some companies expect modest ROI and are blown away, other companies find that SEO produces average results at best.
If you do choose to employ an SEO strategy, give it a minimum of 6 months to show revenue, and 3 months to show initial rankings. SEO takes time but lasts for a long time. Don’t give up on it too early.
Find out if SEO is the right move for your business.