Creating expectation and demonstrating the ROI Of SEO
When it comes to securing funds for marketing campaigns and convincing decision-makers that an area is worth investing in, you need to be able to predict the return on investment (ROI). The estimated ROI of a campaign determines if it’s worthwhile and if the business is likely to be seeing a greater or lesser return vs. other channels.
SEO however is notorious for being difficult to predict, and accurately calculating the anticipated ROI can be challenging. Whether you are part of the marketing team for a big corporation or an agency helping clients grow their online presence, being able to predict and demonstrate the ROI of SEO is difficult but critical. A simple calculation presented below is how to arrive at ROI:
ROI = Cost of investment / Net return on investment × 100%
Calculating ROI requires you to know the investment figure and the likely return figure. The reason SEO is such a complex strategy to calculate is that working out a return figure is no simple task. Many marketers have relied on tracking KPIs such as website traffic and SERP ranking positions to justify their SEO spend. Finance teams and decision-makers often demand more than this, especially if you are trying to secure a budget increase or further investment. And who can blame them? Your SEO must be actually generating a profit, and in this guide, we are explaining exactly how you can demonstrate the ROI of your SEO campaigns.
SEO ROI: The Basics
Demonstrating the ROI of SEO is crucial for creating expectations among stakeholders and investors. It can reveal the potential that SEO has for the business and justify spending in this area. Before you can set out to demonstrate the ROI, everyone within your business must understand the basics.
What Is SEO ROI?
SEO ROI refers to the Return on Investment for Search Engine Optimisation. It calculates the profit that is being made from SEO strategies, usually using metrics such as search engine rankings, goal completions, and organic website traffic. Management teams, investors, and marketing professionals will need to know the ROI of SEO to understand if the strategy is working. SEO strategies are often made up of various aspects, including website content, technical SEO, blog posts, social media, backlinks, and more. All of these areas require investment, and the SEO ROI will demonstrate how much return is being delivered from this investment.
Unlike paid advertising strategies, SEO works with visibility which you cannot purchase. Calculating the SEO of paid campaigns is straightforward because the visibility online is linked with one specific cost and tracking the direct income from each ad is simple. On the other hand, SEO is all about earning that visibility organically over time. This makes working out the initial investment and direct return more challenging but not impossible.
Why Is The ROI Of SEO Important?
For most businesses, the majority of their online traffic comes from organic search. Search Engine Optimisation is one of the most effective marketing strategies around, and so you must accurately understand its financial value. While you might already be tracking SEO KPIs such as Click-Through Rates (CTR), conversion rates, and organic entrances, nothing will measure success as well as ROI. Knowing how much profit you make from every dollar invested in SEO means you can determine which channels are worthwhile and which need to be scaled up. These vital insights can hone your SEO strategy and improve your ROI by highlighting the areas that are working well and those that are not.
Not only is the ROI of SEO important for the marketing department to fine-tune the strategy, but it is important for investors and management. Those in charge of the purse strings need to see concrete evidence that a strategy generates revenue before they sign off on further spending. Being able to create realistic expectations of new SEO campaigns, and demonstrate the return of existing spending, can help you to obtain additional investment. When you can clearly display a positive ROI from your SEO strategy, you can easily generate buy-in and confidence from business stakeholders.
SEO ROI Statistics and Examples
Many marketers shy away from tracking the ROI of SEO because they believe it is a complicated figure to calculate. The truth is, once you understand how to work out your SEO ROI, it is a very valuable figure to know. If you are still unsure whether calculating SEO ROI is worth your time, take a look at some of these hard to ignore statistics:
- 53.3% of all website traffic comes from organic search, which is more than social and paid traffic combined.
- Leads from SEO have a close rate of 14.6%.
- Google revealed that the average number of days consumers take to make a purchase online was nine days longer in 2019 than in 2015.
- 67.6% of clicks on SERPs go to the first five organic results.
- 88% of all mobile searches for local businesses result in the searcher calling or visiting the company within 24 hours.
Here at Blue Array, we have many examples and case studies of how SEO can improve ROI. Our work with Fluidly saw their ROI from SEO rise to 900% in November 2018. There are endless studies out there demonstrating just how vital ROI is for SEO strategies and how organic search can benefit your bottom line.
Forecasting Is Key to Securing Investment
As with most financial decisions, forecasting of SEO is required to create expectations.. This comes before you can begin working out your ROI, as it is all about predicting the outcomes before securing funding. Forecasting can be very abstract, and many different factors need to be considered, including everchanging algorithm updates.
Forecasting your SEO ROI is required if you want to secure further investments. Finance teams will need to see expected profitability before signing off on any spending, so including these details in your campaign proposal can help secure buy-in. At this stage, you will be looking at the ROI that could be achieved and set expectations among stakeholders before you begin. Accurately forecasting an SEO campaign before you start can help ensure you have the correct budget assigned, which is also reflective of the growth you expect to see.
How to Forecast SEO Campaigns?
To forecast an SEO campaign, you need to use an appropriate framework. Many marketers forecast SEO using a set of predefined keywords, and this framework can work very well. Begin by listing the keywords the website currently ranks for, and then the keywords you want the website to rank for after the SEO campaign. From here, you can predict the position increase for each keyword, using the expected outcome of your SEO campaign. Next, you should use the organic CTR for each keyword, which can be found in your analytics accounts or using a CTR tracker. Divide each keyword’s average search volume by the CTR to forecast the traffic you can expect to see; this will give you your traffic forecast.
Using this traffic forecast, you can calculate your revenue forecast for the SEO campaign. Take your conversion rate and average order value for each of your keywords, either sitewide or for specific pages your keywords are mapped to. Then divide your estimated traffic with the conversion rate and average order value to calculate your forecast revenue. You can now use this ROI forecast to demonstrate the value of the SEO campaign to stakeholders and key decision-makers in the business.
Another method for forecasting SEO campaigns is using statistical models. Linear regression is a widely used technique for modelling the relationship between two variables. This method uses the outcome of previous events to predict future events. Exponential smoothing can also be used for forecasting and takes into account the average value of past trends. This is effective for removing outliers and highlighting data errors to help smooth your prediction.
To use these statistical models to forecast SEO ROI, you will need to have a few years of historical data. This historical data will work to forecast future results of SEO campaigns and also take into account seasonal differences and other factors. You can use your past data to predict future website traffic through SEO, and these predictions can then project the revenue forecast.
SEO Forecasting Challenges
As with any type of forecasting, the results are not going to be perfect. SEO forecasting has its own challenges and estimating the ROI of SEO needs to be taken with a pinch of salt. The forecasting method using keywords is based entirely on predictions, so there is always going to be room for error. It can be challenging to predict the trends of keywords, and other factors like personalisation can alter ranking positions. Statistical forecasting using previous data also comes with challenges. Particularly in the current climate, as the Coronavirus pandemic has made all data for 2020 an outlier.
Essential Reports for Calculating the ROI Of SEO
After securing investment for SEO spending using your forecasts, you need to be able to report back the results of the campaigns. SEO is a long-term strategy, so it is often worth tracking ROI over long periods and on an ongoing basis to see the true results. Accurately working out the return gained from SEO efforts is no easy task, as so many factors can come into it. There are various methods for calculating the ROI of SEO and demonstrating it to stakeholders. Here are three essential reports for calculating the ROI of SEO:
1. Conversion Tracking
Using conversion tracking reports in Google Analytics can help you to track every conversion on your website. These will vary depending on your business model. Ecommerce websites will be able to measure exact online revenue and transactions, while lead-based businesses can track form submissions and other types of conversions. From there, you can assign financial values depending on your existing sales data. Google Analytics allows you to determine how your conversions are tracked so that you can tailor this report to your unique business.
Once you are tracking conversions on your website, you can break these down by channel by looking at your Conversions report. Google will automatically separate your data into different MFC channels, including Organic Search. Organic search refers to all search engines such as Google, Bing and DuckDuckGo. Here you will have a clear view of the revenue generated from organic channels, and you can use this to calculate your SEO ROI.
2. Assisted Conversions
Most customers will visit your website many times before making a buying decision. How they come to your website each time has an impact on your ROI. For example, they may first find your website using organic search and spend some time browsing products. They could then return later by typing in your website URL and coming directly and then convert to a paying customer. Your conversion attribution model could skew your ROI figures, depending on where customers are coming from.
Looking only at last-click attribution, your sale would look like it had come from direct traffic and would not count towards your revenue from SEO. The truth is the customer first found you through organic search and likely wouldn’t have found you if it wasn’t for your SEO efforts. Looking at your Assisted Conversions report can provide value for each channel, even when they haven’t directly resulted in a conversion.
3. Top Conversion Paths
The Top Conversion Paths report works similarly to Assisted Conversions as it looks at all of the stages that resulted in a conversion. Instead of breaking it down by each channel, it shows the most common paths your customers are taking before converting. This report might not provide exact financial figures for your ROI but is very valuable for understanding how your customers are interacting with your business online.
Demonstrating the ROI Of SEO For Different Campaigns
When it comes to creating expectations and demonstrating the ROI of SEO to secure buy-in from decision-makers, you need to consider the various campaigns that make up your SEO strategy. However, some will have interdependencies such as internal linking (or information architecture) which is really important for content ranking and it will be hard to separate this technical work from the content itself, which may need creating or re-optimising.
Where possible though breaking it down by each campaign can help to further create expectations and demonstrate the return. If there are interdependencies, make that clear as stakeholders may only be willing to commit to certain initiatives. Here are some different methods for measuring different SEO campaigns:
If you are hoping for investment in conthet, whether that be hiring a copywriter or building a blog on your website, you need to show the return that your business can expect to see. Looking at website traffic and conversions by page is a great way to demonstrate that blog posts can drive more customers. Google Analytics allows you to break down your website traffic by URL, so you can see which content performs best and which is converting. It can also be worth demonstrating the traffic value of a content by calculating how much it would cost to pay per click on the keywords which it is getting visited from organically.
Website Design and Content
Your website design and content make up part of your SEO strategy. Whether you are looking to redesign your site entirely or add a new page, you will need to demonstrate the ROI. Looking at metrics such as bounce rate, page views, and average time spent on each page can help you analyse your website performance. This is looking in more detail at the impact your website is having once users have reached your site already, as opposed to generating traffic. However, site speed and mobile performance can play an essential role in your organic traffic and SERP rankings.
Link building is an effective SEO technique when done correctly and when needed. Link building isn’t necessary for all sites but tracking the ROI is essential and particularly challenging. While Google Analytics can track referral links directly from other websites to your own, it cannot track how these links are impacting your rankings on SERPS. It is difficult to say that one specific link had a particular outcome for your web traffic, and more importantly, your revenue.
“Domain Authority” (“DA”) is a popular metric used to talk about link building success but one that is highly misleading. A high ‘DA’ site may be clearly engaged in selling links and the outbound links being discounted completely by search engines.
A better proxy for measurement we’ve found is using Majestic SEO’s trust and citation score to come up with an overall trust score for the linking domain.
Trust Flow / Citation = Trust Score
In the above calculation we’re looking for a high trust, high citation number and a ratio close to 1.
This isn’t perfect, but it’s a much better measurement than “DA”.
Link building takes time to have an effect, and you will not see rankings or sales rise immediately after receiving a link. This doesn’t mean that tracking ROI is impossible, just that the figures will need to be taken lightly as there are no certainties. SEO and Link Expert, Debra Mastaler, says the best way to calculate ROI from link building is to use analytics to understand new visits, bounce rates, and user demographics. This can provide information on who your links are attracting and the value they have to your business.
There’s no doubt though that links do impact SEO and this can also be measured by a demonstrable uplift in rankings. In our experience it can take up to three months to see this from a high quality link being placed to seeing any results.Once you do observe this kind of impact, and you’re sure this came as a result of the link building, the subsequent increase in rankings, leading to an increased CTR and visits would then be impacting conversions which can be tied back to link building.
Being able to create expectations and demonstrate the ROI of SEO can open up a whole realm of new opportunities. You will be better placed to secure buy-in from key decision-makers within the business, and they will be more confident to release investment for your strategy. Remember that SEO is not a quick solution, and results can take a long time to show. You should monitor the ROI of SEO regularly to give your stakeholders a complete picture.