Are you curious about SEO’s effect on your business?
To ensure your SEO efforts are profitable, you need to calculate your SEO’s return on investment (ROI). ROI is a way of measuring how successful your marketing investments are. In other words, it tells you whether or not you’re making money with your SEO campaigns.
Measuring your ROI outlines a simpler path moving forward. If your results are excellent and your ROI is positive, you should continue with SEO. If your ROI is negative, it might be time to switch your marketing initiatives. Some industries and locations are highly competitive, requiring a large budget to compete.
This article will cover SEO ROI, why it’s essential, and how to calculate it using a formula.
What is SEO ROI?
SEO ROI is the total amount you’ve spent on SEO subtracted from your total revenue (from SEO), divided by your total amount. However, it isn’t that simple to figure out which revenue streams came from your SEO investment. Tools like Google Analytics allow businesses to access this data more easily. We’ll discuss how to calculate total revenue from SEO using tools later.
Why Calculating SEO ROI Matters
Without calculating your SEO ROI, you could be wasting valuable resources and money on a marketing strategy that’s not profitable. On the other hand, if your SEO campaigns are performing well, continuing them will only lead to larger profits. By understanding how much revenue each of your SEO campaigns brings, you can allocate more funds towards the campaigns that pull the more significant levers.
Moreover, calculating ROI allows businesses to set and track KPIs (key performance indicators). Doing so increases the chances of success because it provides a clear target. For example, if your goal is to increase organic traffic by 15 percent in three months, you can track this progress using Google Analytics and other tools.
When should you calculate ROI from SEO?
SEO is a long-winded process. Likely, you won’t see results for a few months, which is why you need to be careful calculating ROI too early. When a company owner doesn’t know much about a general SEO time frame, yet expects excellent results from the agency they’re working with, their relationship might combust. That’s why it’s crucial to wait to calculate your ROI from SEO. According to Digital Authority Partners, nine months into your SEO journey is the ideal time frame for calculating SEO.
If you’re in a highly competitive industry, it could take longer. And if you’re in a less competitive industry, you might see a positive ROI way before nine months. Each SEO campaign is different, and maintaining consistency is the best thing to do. If your SEO package is lacking, check out this article for some ideas on optimizing it.
How to Calculate Your SEO’s Return on Investment
First, if you already have your total cost and total revenue (from SEO) numbers on hand, follow this simple formula:
Total revenue from SEO minus total cost, divided by total cost. Take that number and multiply it by 100 to get your percent return on investment.
Otherwise, you may not have the right tools and resources set up to measure ROI. This is where Google Analytics comes in handy. GA is a free platform that provides detailed insights on website traffic, user behavior, and more.
To measure your SEO ROI using GA, you need to set up conversion tracking. This tracking will allow you to see how much revenue each SEO campaign generates. How you set this up depends on how you obtain your revenue.
e-commerce businesses usually get their payments from sales. To track this data in GA, you need to add a conversion tracking code to your purchase confirmation page. You can find this code by going into your Adwords account and clicking on the Tools tab. If you don’t use Adwords and want to use another method, Google has instructions for all types of e-commerce tracking.
GA not only provides stats for ROI, but it also allows you to segment your data in several ways. This data is vital for understanding which SEO strategies are working and which ones aren’t.
Conversion rates and other KPIs are essential to track and measure your SEO campaigns’ successes. By understanding how your campaigns are performing, you can make necessary adjustments to increase traffic and revenue.
If your business provides services instead of products, you’ll need to use a different approach to track revenue in GA. Services businesses usually get their income from contracts or monthly retainers. In this case, you would set up conversion tracking for goal completions.
A goal completion happens when someone visits your website more than once and completes an action, like filling out a contact form. Not all leads will turn into revenue, so you’ll want to have some data before you try to calculate ROI. For instance, what is your average conversion rate on form submissions? What’s the average revenue amount per conversion? You use these numbers to get a relatively accurate estimate of your dollar amount per-form submission. In addition, use the data that comes from organic search. You’ll want to avoid skewing your data by including direct and referral traffic.
What is a good ROI for SEO?
That’s a good question, and unfortunately, it depends. This is because so many factors go into calculating SEO ROI, including the website’s niche, how competitive the keywords are, and how much work has been put into optimizing the website. Generally speaking, though, a healthy return on investment for SEO is anything above 15%.
Of course, there are times when you’ll see massive ROIs for SEO campaigns. But, that’s just the exponential nature of SEO. Once you start ranking for keywords and getting traffic, it snowballs and gets easier to rank for even more keywords.
SEO isn’t a get-rich-quick scheme, but it provides a long-term ROI that is well worth the initial investment if done correctly.
Now that you know how to calculate your SEO ROI, it’s time to do it. But what’s next? What can you learn from KPIs like ROI? How can you increase your ROI?
Well, there are several things you can do to increase your SEO ROI. You can:
- Set up conversion tracking in Google Analytics
- Research and target high-value keywords
- Optimize your website for conversions
- Build quality backlinks to your website
By following these steps, you can ensure that your SEO campaigns are on track for success.