You are a business owner and spending hundreds and thousands of dollars on SEO but not getting the result? So here is an excellent guide on how to calculate the ROI of SEO Campaigns for every possible situation.
Find out if you really need SEO services: find out if SEO really represents for you an investment or a mere expense as an end in itself. Each case is in its own right.
What is SEO?
SEO stands for Search Engine Optimization. This expression refers to all the actions and techniques that act on the optimization of a site on search engines. In other words, SEO represents all the practices that allow you to improve your ranking on Google on queries related to your business.
SEO is an art! Perhaps better to call it to discipline rather than art, it must be perceived as such because its practices are essentially based on experiments and interpretations of case studies. This empirical approach and the regular updates of the algorithm require that SEO consultants are constantly updated, but giving precise definitions and certain rules in this sector is quite complex.
In this article, we talk about how to calculate the ROI of SEO Campaigns both for eCommerce and for sites that rely on the generation of contacts.
How Does SEO work?
Google, bing, and other search engines assign their search results based on the relevance and authority of the pages crawled and included in their web index, to a user query to provide the best answer. Every search engine works similar to learn how Google Search Engine Works.
Google uses many more than 200 signals (a legend often heard in SEO) to score search and SEO results.
It is often useful not to focus too much on individual positioning signals but to look more towards the general objective, there are signals that are more relevant than others, so based on what you want to achieve, some strategies should be preferred over others.
The guidelines for assessing the quality of Google’s results provide many details and examples of what Google ranks as high or low-quality content and websites and their emphasis on rewarding sites that clearly show their competence and authority.
Google uses an algorithm based primarily on the anchor text indicated to calculate the popularity and authority of a page, and as Google becomes increasingly sophisticated, links are still a fundamental signal when you have to rank a site, even if now with the introduction of BERT the focus is no longer on the single content and links but on the whole sentence.
Therefore, SEO can also include activities aimed at improving the number and quality of links to a website, from other websites. That is known as Link Building. Learn what is link building and why it is important.
I have written some amazing blog posts on how to create backlinks.
Relevant and reliable websites linking to a website are a strong signal for Google that the site in question could be of interest to users and therefore that result is pushed onto search engines.
Why SEO is important
There are many reasons why optimizing your site for search engines is important. Among the main reasons are:
Positioning on organic search results shows users that you are among the best in your industry.
I know that looking at the data can be a mere matter of traffic, however doing research related to a certain topic and being present on the front page for that specific query, somehow in the mind of the user a thought is established that will position you among the top of mind in that sector.
Just think about it. If I looked for an architect in Milan, I am much more likely to trust the first result than the 21st one, it is a bit the same principle as the old yellow pages, where the results that started from the top were the most called.
Pushing the website to the front page on Google has a huge impact on the amount of traffic you receive. You do not believe me? Let’s take a look at the CTR below for each position on the first page
# 1 Position: 32%
# 2 Position: 17%
# 3 Position: 10%
# 4 Position: 7%
# 5 Position: 5%
When you get to the second page of results, less than 1% of users click on your website, therefore looking at the numbers, it is quite clear why it is important to position yourself for certain keywords.
The difference between second and tenth place can mean the difference between a website that sells and one that receives very little traffic, so it should not be underestimated.
It’s not just the volume of traffic that matters. It is permanent.
Let’s think about the part of Google Ads for a second. With PPC we pay Google and Google places our ad on its search network. As soon as we stop paying for Google, the ad disappears and the traffic is reduced. Most people prefer PPC over SEO.
Instead, SEO is designed to last. With SEO, your performance is based on all the work done previously. All the content you have created, the links and the optimization will bear fruit. That job doesn’t disappear overnight, and neither does the traffic.
If your SEO improves and you are well-positioned, you can relax and watch the traffic that arrives for months or years without doing anything (or almost).
SEO improves brand awareness, authority, sustainable traffic, and conversions. But above all, if it is done well, it can offer a very high return on investment (ROI).
Unlike other marketing strategies, SEO is quite simple as it is true that for free, but everything you don’t pay for you must have time to do it, and SEO takes a long time if you decide to choose the freeway, but among all the channels is the one with the highest return on investment.
How does SEO ROI compare to PPC?
Since I started my SEO consultancy, I happen to speak regularly with SMEs entrepreneurs who spend their budget distributed as follows: 30% Facebook 70% and google ads, and the question they ask me most often is ” why should I start investing in SEO optimization? ”
My answer changes according to the interlocutor, but I try to make him understand what are the benefits of a discipline that in the long run can make a difference in the business marketing plan.
I have nothing against Adwords, Google Ads is an excellent advertising channel, but by making a comparison relating to customer acquisition with Google Ads compared to SEO, we immediately understand why to integrate the organic part.
If you bid on the keyword “Milan apartments” on Google Ads, we would pay around € 5-6 per click. (with exact match) Google Ads tells us that the clickthrough rate for this keyword is 10.7 %%, on average.
The average of people who convert keep it low to 1% and therefore for the beauty of € 7100 we take home 17k clicks and 170 leads. We need to understand how many of these leads become actual customers.
Google Ads is a great investment that companies can focus on while intensifying their SEO efforts. However, the transition to long-term SEO leads to exponential growth.
How To Calculate ROI of Campaigns: The Most Effective Procedure
- Set up conversion tracking
The first step in determining SEO ROI is to set up conversion tracking on Google Analytics. This allows us to track all conversions on the site. The analytics account settings vary if you sell services or products.
E-commerce can use e-commerce monitoring to extract data from their online transactions and measure their revenue exactly. Companies, like service providers, can set conversion goals such as lead form submissions and assign economic values to those goals.
Here’s how both types of businesses can set up conversion tracking on their sites:
The best way to track revenue from an eCommerce store is to set up eCommerce tracking using Google’s instructions.
Once we start monitoring the eCommerce data on your site, we will be able to access an eCommerce Overview report (Conversions> Ecommerce> Overview) with all the information related to online sales.
This report is useful for measuring the overall success of the site and monitoring its performance. Therefore, although we are not going to immediately calculate SEO’s return on investment, the advice is to set up eCommerce tracking as soon as possible.
If you don’t make sales directly on the site, it’s a little more difficult to get exact data on the amount of revenue generated online. However, to make a more or less accurate estimate, what I do is assign a value to each of the conversions based on past sales.
Let’s go inside GA and proceed to Admin> View> Goals within Analytics and create goals for each of your conversions on the site. These goals can range from sending contact forms, requesting free quotes and even making phone calls if call tracking is set up on your site.
These values will not be perfect, but even with a little data history to draw from, we can get a fairly precise estimate. By determining how many leads are converted into sales, for example, if the form on the site is completed 100 times a month and 25 of these leads become customers, the target has a conversion rate of 25%.
Calculating the average value of each sale, if each of the leads that convert spends € 200, the average value is € 200.
We determine the value of each lead by dividing the total conversion value by the original number of leads. Using the values indicated above, if we have 25 customers and each one spends € 200, we have a profit of € 5,000.
Let’s divide the 5000 € by the leads we had at the beginning then 100 € and we see that the average value of the lead is 50 €. We follow this formula for each of the goals and enter the corresponding values before moving on to the next step.
The organic search channel includes all users who found the site in search engine results like Google and Bing, which means that we can attribute these conversions to our SEO strategy.
- How to Calculate ROI based on your monthly spend
Once we understand how much revenue the SEO strategy generated during a specific period of time (typically a month or a quarter), we can compare the amount with the SEO investment to determine its ROI.
If the company already has a method for measuring the ROI of other marketing channels, we can use the same formula to calculate the return on investment on SEO.
For example, some companies calculate ROI using the net profit of each sale rather than the total turnover. Let’s make sure to use the same values for the SEO strategy, otherwise, the comparison is wrong.
If you do not have an existing method for calculating the ROI on marketing, you can use the basic formula of Investopedia, (Return on investment – Cost of investment) / Cost of investment.
So, let’s multiply the number we get by 100 to get the ROI in terms of percentage. Using the example above, the organic search conversions generated sales for € 22800 in a month and let’s say, for reasons of a simple calculation, that this company spends € 1500 per month for the SEO part
Using the basic ROI formula, we can determine that (22800 – 1500) / 1500 = 2.13 Multiply it by 100 and the ROI of your SEO strategy is 14.2%.
How long does it take to see the SEO ROI?
One of the most frequently asked questions they hear is “how long does it take to get a return on investment from SEO?”
SEO is a long-term investment and like all investments it takes time.
It’s exactly like in the financial market, no one has ever gotten rich by investing in the short term (except for very, very rare cases) and even search engine optimization often takes 3-6 months before starting to bring any results.
WARNING! Don’t believe any fake SEO consultant who promises any kind of positioning result.
There are SEO-side strategies that work better than others and that apply to different sectors, we often see a 50-60% traffic growth at the traffic level, but it cannot be generalized for all sectors.
To Give an Idea …
The answer is, therefore “it depends” because there are many variables involved, but I feel confident enough to say that 5/6 months of work are enough to bring a site that makes 1000 visitors per month to at least 4-5 thousand.
Now that we’ve got an idea of how to calculate the ROI of SEO campaign, so now make sure you will not repeat these mistakes and still if you have any questions or need help, you can leave a comment below and I will try my best to solve your problems. Stay tuned for more amazing blog posts.