Site owners have typically calculated the ROI of SEO traffic in two ways.
The first is the cost of buying that traffic through Google Ads. The real money earned from those organic clicks is the second factor to consider.
Unfortunately, both of these tactics necessitate extremely high sales as well as spotless analytics, which many smaller or newer websites with limited resources lack.
And for B2Bs who don’t make income at the time their organic traffic converts, it is even harder to track which keyword rankings, landing pages, or content marketing items pushed those users into the conversion funnel and created the most revenue.
How do you calculate SEO‘s return on investment?
Is there a way to calculate SEO‘s return on investment?
Yes. You can get a more accurate view of the true return on your organic SEO investment by combining extensive, daily keyword tracking with improved conversion tracking and closed-loop analytics.
SEO Return on Investment vs. PPC Return on Investment
CPC has long been utilized by digital marketers to determine how much each organic click is worth. This is because advertisers are actively paying that price in paid media campaigns to gain clicks for those keyword searches.
However, with organic SEO, you may receive the same number of clicks without having to pay for them. For example, the website below ranks first for a phrase that generates approximately 1,155 clicks per month and has a CPC of $25.
In a Google Ads campaign, this company would have to pay about $29,000 to acquire the same number of clicks. They are obtaining those clicks at a significantly lower cost because they are ranking organically for this term. If they keep their top ranking, they will continue to receive those clicks indefinitely.
So, if you factor in CPC costs for every keyword your website currently ranks for, the economic value of organic clicks is likely to be quite high.
When it comes to competitive keywords, most SEO software uses an average bid CPC from Google’s tools. However, many marketers, particularly those in the top Adwords ad position, spend considerably more. As a result, most businesses underestimate the true economic value of SEO traffic.
But the reality is very few firms are willing to invest an infinite amount to purchase clicks in Google Ads campaigns. So, while CPC is the most effective approach to demonstrate a decreased cost-per-acquisition in SEO, it isn’t a true metric of ROI.
Getting clicks is important for brand exposure, but they shouldn’t be included in your ROI calculation until they generate genuine income for your company.
You must know what organic visitors do on your website after clicking on your SERP result in order to compute the genuine ROI of your SEO operations. Here’s how to go about it.
Step 1: Determine when your ROI calculation will begin and stop.
SEO campaigns, unlike PPC campaigns, do not usually have a defined start and finish date. Furthermore, SEO takes time to provide results, especially for new websites that are just getting started and need to establish their domain authority.
The SEO performance of the same web page over three, six, and eight months is shown in the graphs below.
If this company calculated their ROI over a three-month period, they would have a negligible return on investment, as they only received five organic clicks, none of which may have resulted in actual revenue.
However, as the page’s ranking positions and impressions grew, the number of clicks increased. The six-month and eight-month performance metrics for this page show a significant return on investment for this company’s SEO efforts.
If you’re performing SEO correctly, your marketing staff should be working on it all the time. However, establishing a revenue estimate necessitates the use of a certain time frame. In order to demonstrate a higher ROI for SEO, it’s best to lean toward longer time periods.
Step 2: Calculate the cost of your SEO campaign.
This is straightforward for organizations calculating customer ROI. The price you charge for SEO services is the cost of your client’s SEO. You can rely on employees from other departments, such as marketing team members, web developers, or freelance content writers, to implement your SEO plan if you have an in-house digital marketing team.
You may want to incorporate the following costs:
Salaries of team members
The cost of freelance writing
Services provided by an agency
The cost of constructing a link
Subscription fees or SEO software tools
The cost of web design and development
Certain SEO operations have a considerably greater price tag depending on what your SEO strategy entails (link development, on-page SEO, technological enhancements, etc.). Changes to web design or development, as well as link building, can be more expensive, but they will almost always have a greater impact.
The easier it is to quantify your ROI, the more exact and targeted your SEO approach is. A solid keyword strategy that focuses on keywords with higher conversion potential and quality traffic will almost certainly boost your total ROI.
Step 3: Determine which of your website’s conversion steps are profitable.
When an organic visitor completes a desired activity on your website, it is called a conversion.
Identifying conversion actions is relatively simple for brands that generate sales when their clicks convert. However, for brands with longer sales cycles (such as B2B and B2C), determining which website actions are part of the conversion funnel is critical.
If your website doesn’t process sales, you’ll need to figure out how to generate qualified leads for your sales team or move a consumer closer to making a final purchase decision.
Calculate the approximate cost of each conversion action.
The value of your conversion action will be the actual revenue generated from the sale if your website processes online transactions.
Assign a value to conversion actions such as: For brands that create leads rather than sales, assign a value to conversion actions such as:
Forms for submissions
Bookings for demonstrations
Attending to appointments
Trials are available for free.
Email list/newsletter signups
After you’ve determined which actions are part of the conversion funnel, you’ll need to assign each one a monetary value.
An organic visitor who fills out a submission form indicates that they are a possible buyer, but an organic visitor who schedules a demo or meeting with your sales team is most likely far further down the sales funnel. As a result, the second activity should be given a greater priority.
Micro-conversions, live conversations, video views, and other B2B features
Micro-conversions should also be considered. Start a live chat, click onto high-value pages, watch a sample video, and other actions can all have monetary value.
Even if the ultimate sale happens long after the first click, assigning lower values to these actions can greatly help B2Bs narrow in on how organic clicks contribute to revenue generation.
Transactions, average order value, repeat orders, and so on for e-commerce sites.
Calculating the value of your conversion actions is simple if you have an e-commerce site. The actual revenue generated from your sales will be the value.
Other than whether or not they just completed a purchase, there is more information about your organic visitors that you will want to know. Consider what else you might need to know in order to properly set up your conversion tracking.
What was their budget?
What products did they examine?
Have they added any of the suggested goods to their shopping cart?
Did they leave their cart in the middle of their visit?
Was this their first purchase or a recurring one?
Although the above data will not be used in your revenue calculation, it will be extremely useful in iterating on your UI/UX and SEO strategy in order to enhance your overall conversion rates.
Step 4: Set up your conversion tracking and analytics
Once you’ve determined which conversion steps are profitable, you’ll want to start tracking them in Google Analytics.
Google Analytics delivers a wealth of data on how long users spend on your site, how many pages they read, and much more. The biggest aspect of this free platform, however, is the ability to set particular goals and measure how many people complete them throughout their visit.
Your Google Analytics and Google Search Console accounts should be linked.
To evaluate SEO’s return on investment, you’ll need to know not just what your visitors are doing on your site, but also which conversion actions came from people who arrived via organic search.
You may see which goal completions on your landing pages come from organic visitors in Google Analytics reporting if you link your Google Search Console account to your Google Analytics account.
When these two platforms are linked, it’s simple to see all of this important data in one spot.
Create unique goals for B2B conversion tracking.
Go to the admin tab in Google Analytics to put up goals. In the right-hand column, you’ll find the “Goals” feature.
You will be able to add new goals to track on the Goals page. Make sure each conversion action you established in step three has its own goal.
When you create a new objective, you’ll be given the option of assigning a value to it. Assign the values you determined in step 3 to each individual target.
Your conversions’ economic worth will now be reflected in your reporting.
Set up e-commerce conversion tracking for e-commerce sites.
Conversion tracking parameters for e-commerce sites are available in Google Analytics. There are two types of e-commerce: standard and enhanced.
These settings allow you to access more detailed information about the transaction process, in addition to tracking sales:
Order value on average
It’s time to buy.
When customers began the checkout process,
Carts that have been abandoned
Setting up thorough conversion monitoring requires adding some HTML tags to your page, so if you’re not familiar with working on the backend of your website, consult your web developer or an experienced SEO consultant.
These conversion tracking options will help you improve your conversion rates and, as a result, your overall revenue over time.
Connect Google Analytics to your CRM software for B2Bs.
B2Bs must shut the loop between their Google Analytics account and their CRM to get even more accurate ROI figures. Knowing which organic leads turned into clients allows you to make an even more precise calculation.
Here’s how to set up closed-loop analytics in a nutshell:
When a user submits a lead generation form, add a script to your website that collects the person’s Client ID (you can use Google Tag Manager for this)
Customize the form so that the Client ID is automatically sent to your CRM.
Export custom events (such as when leads become customers) back to Google Analytics using CRM interfaces or plugins.
The basic concept is that your Google Analytics data is fed into your CRM, allowing your sales and marketing teams to see which leads came from organic search. Here’s an example of HubSpot reporting that differentiates leads based on where they came from.
Closed-loop analytics allows you to see how much income was generated from an organic lead even if they came at your website via search months before they signed a final deal.
Track keywords in greater detail.
You may also monitor which exact queries are driving your organic clicks if you connect your GA account to GSC.
Although understanding the precise phrases that produce the most organic traffic and the highest quality leads is not required for an accurate ROI calculation, it is critical for iterating on your SEO strategy and improving your total ROI.
It’s doubtful that you get a clear view of your SEO performance if you don’t employ an accurate SEO rank tracking program like Google Search Console. Make sure you have a Google Search Console account or are using a software platform that incorporates Google’s SEO dataset, such as GSC Insights below, because Google Search Console is the single source of truth for your website’s keyword ranks.
Bots crawl the SERPs for keyword rankings data in most popular SEO software. However, they only scrape a small amount of keywords at a slower rate. As a result, the keyword data is frequently out-of-date or incomplete.
To truly iterate on SEO for increased income, you’ll need as detailed a picture as possible of which terms generate the most organic clicks and quality traffic.
Step 5: Calculate the return on investment (ROI) for SEO.
Now it’s time to have some fun. You can generate a much more accurate picture of the ROI of your SEO expenditure by plugging in the total conversion and revenue values determined in step four for the selected time period.
(Gain from Investment – Cost of Investment) / Cost of Investment is the most basic ROI calculation. As a result, you’ll get a percentage format.)
Consider the following scenario: To increase ranks for a certain landing page, your organization invests in a three-month link building effort. Your ROI estimate would look like this if the page generated $5,000 in organic conversion activities or revenue: 1647 / (5000 – 1647) = 2.03 (203 percent ROI).
This will still be an anticipated ROI for lead-based enterprises. It will, however, be the most accurate estimate available if your conversion tracking is properly set up.
Why is it so important to understand your SEO ROI?
Regardless of your industry, getting an accurate ROI assessment for your SEO efforts is critical for your organization.
Not only can demonstrating a good ROI assist you in forecasting possible revenue growth for specific SEO campaigns or activities, but it may also assist you in gaining greater buy-in from key executives or stakeholders.
For those who are unfamiliar with SEO, it can appear abstract. But, as with any other digital marketing platform, it’s all about deciphering data at a fine level and responding accordingly.
When you start tracking your SEO ROI, you’ll notice that it’s far higher than other digital marketing platforms. Getting your brand or marketing team to devote more time and resources to improving SEO performance on your highest-converting landing pages can result in a big increase in long-term revenue for your firm.