ROI is a great way to put the monetary value of your digital marketing effort into perspective. Calculating your ROI is a straightforward process if you’re measuring return on investment for Pay Per Click (PPC) advertising as you can easily put an accurate figure on the investment across any given time frame. Typically, PPC costs involve the amount you’re being billed per click, plus the fee of your internal team managing the campaign or agency fees in case you’ve outsourced paid search management.
Calculating ROI for SEO, however, can be tricky. There is no fixed cost per click for SEO – instead, you earn organic visibility on Google and other search engines by doing things such as building high-quality content, technical optimizations, and investing in off-page efforts.
ROI from SEO can be subjective from company to company. For some, it may be as easy as measuring product conventions, or how many leads you to get from a contact form. For others, ROI might be keyword visibility alone or the fact that you can trust your SEO person and their input.
For the sake of this article, we’re specifically measuring SEO ROI from numbers alone. Let’s get into it.
What is the cost of SEO?
When determining the ROI from SEO, we need to establish the costs involved.
Most SEO agencies charge a fixed monthly fee based on deliverables and the expertise of the team. You can also include other fees such as social media marketing, content creation fees, etc. From an agency, SEO services can range between $300-$10,000 per month with the average cost being around $2,819.
In-house resources might be easier to track than outsourced ones. You can tally up the time spent by each individual working on SEO. This makes it easier to calculate how much money you spend on SEO in a given month. If you are using an in-house resource, then be sure to add the costs of the platforms needed to perform SEO tasks (Ahrefs, SEMrush, Moz, etc.).
How can you calculate the ROI of SEO?
To calculate the ROI of SEO let’s break down a super simple example. Let’s say that example.com is an eCommerce business that ranks in position three for its “Best Example Product” priced at $45.
We know that a result that is sitting in position three of the SERPs gets about a 7% click-through rate (CTR) (with transactional intent). Now let’s say that the product page for “Best Example Product” gets an average CTR of about 500 clicks/month and the average conversion on that product is about 3%.
Currently, that page is generating you about $675/month (500 x 3% x $45).
Now, let’s say that you are an in-house marketer who whats to vamp up your company’s SEO so you purchase SEMrush at $229.95 a month. Since you have a tool that gives you more in-depth metrics you are able to rise the original “Best Example Product” page from position three to position two. From there, we know our CTR rises from 7% to 11%. Giving us a new CTR of about 785 clicks/month. We have now raised the page value from $675/month to $1,059.75/month with a $154.80 ROI on SEO (or $1,857.60/yr).
If that product page continues to move to position one on Google, our average CTR increase to 1570 clicks/month which gives us a $1,214.55 ROI on SEO (or $14,574.60/yr).
Now, clearly, your SEO efforts will be broader and spread out across multiple products in this example. If that was the SEO ROI on one product, image the ROI if you’re doing 10, 20, 30 at a time!
When it comes to calculating an ROI for SEO in different industries such as service-based or restaurants, the math gets a little more difficult. To combat this, establish your companies numbers in the beginning. If you are a local rehab or a property management company, figure out the average dollar value of each client you have. From there, set up multiple conversation goals via Google Analytics to understand the behavior of your users and be sure to integrate Google Search Console to get data on your average position and CTR on pages and keywords. Once you get all the numbers, put them into the similar model above and follow the same process.
SEO key performance metrics
KPIs are vital to your SEO Strategy. You should monitor these indicators to make sure that your efforts are working and to help determine an ROI on your endeavors. These may include:
- Organic Pageviews
- Total Number of Ranking Keywords (or monitoring keywords positions)
- Bounce Rate
- Event tracking
Keep in mind that one metric rarely tells the whole story. When establishing KPIs, be sure you include a number of metrics that can provide a more complete picture. For example, let’s say your KPI is just goal conversions. When goal conversions don’t increase, does that mean your ROI on SEO diminishes? Not necessarily.
If you have other KPIs established such as keyword rankings, CTR, and impressions; and all are increasing then you know where you need to adapt your SEO strategy. Is not that SEO isn’t working for the site, the site just has weak conversion opportunities.
How Long it Takes to See ROI from SEO
One of the best things you can do is to get educated on SEO before hiring someone or taking on the endeavor yourself. SEO is a long-term game and you probably won’t see crazy results at first.
It will take about 3-6 months to start seeing improvements with your organic visibility and rankings. I will usually tell clients to give me at least three months before firing me. That’s because I know in that three months we should start to see organic indicators that the SEO strategy is working.
How Does the ROI of SEO Compare to Paid Search ROI?
Business owners typically question whether or not they should switch over to SEO from Paid Ads. The short answer to this- it depends. Ask yourself:
- What are your business goals?
- What are your competitors doing?
- How much does your marketing budget allow you to invest in SEO?
Google has stated the ROI on organic search is 5.3x compared to only 2x for paid search. In other words, SEO is great for the long-term strategy and Paid is great for the short-term strategy. I recommend that clients invest in both so that they’re continually developing their digital marketing presence over tim