What’s the ROI on SEO and How Do I Calculate and Measure It?

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SEO ROI

 
Like any smart business owner, you want to see the money you put into your business come back with profit. Since you’ll be spending hundreds of dollars on your SEO strategy, it’s only natural you want to see a return on your investment (ROI).

But what most business owners get wrong is that your ROI isn’t based on the increased traffic on your website on social media. Like all the other aspects of running a business, your ROI is based on how much you get back in terms of revenue.

An SEO strategy can increase the number of visitors on your website. But what good will traffic do for your website if no one ends up buying your products or services? Now, an effective SEO strategy – that’s what turns visitors into customers.

But just how effective are the SEO services you’re receiving? Here’s how to tell your ROI on your SEO strategy.

ROI for Digital Marketing

In a business setting, everything you buy or invest in has an ROI: the raw materials, the labour, and even down to the decorations you use. The financial ROI may not be direct or evident, but it’s there. A restaurant that invests in tasteful décor, for example, can get its ROI from the free social media marketing they get from customers that unintentionally market their business to their connections.

business-analysis-roi

The same applies to digital marketing. The concept of ROI is simple: if your digital marketing and advertising expenses are much higher than the additional revenue you make after implementing your digital marketing strategy, then it’s not a very good one. But if your expenses are less than the additional revenue, you know that you’re getting a return on your investment.

There are various ways to calculate ROI for different digital marketing strategies. For Pay-Per-Click advertising, it’s pretty easy to compute how much you spend on PPC management and compare it with your revenue.

ROI for SEO: What It’s Not

Let me first tell you how to not measure ROI. Some marketing agencies will report an ROI because they got your website to rank high for a few short-tail keywords. However, search engine ranking is not an assurance that you’ll get traffic or convert website visitors into actual paying customers.

Let’s say that you own a women’s shoe store in Melbourne and you’ve hired an agency to do your SEO. An SEO company might claim that you do have an ROI because your business ranks in terms of local SEO for the keywords “wedges” or “kitten heels”. However, just because you’re in the first page of these keywords does not mean you’ll be getting increased sales.

The keyword “wedges” is very broad. It can refer to the shoes in your store, but it can also refer to golf clubs, a knife, or one of the six simple machines. So, the keyword is too broad that you’re getting a lot of traffic, but there’s a high possibility that a lot of that traffic isn’t looking for you. The keyword “kitten heels,” on the other hand is more specific and pointed towards shoes, but not all users who search it do so with the intent to buy shoes. Some will look at it to find out what type of shoe that is, compare it with other shoe styles, or just look for pictures for their personal use.

So, someone searching for “kitten heels” has a different search intent from someone searching the keywords “affordable kitten heels near me.” Therefore, just because you’re ranking for certain short-tail keywords with high traffic does not mean you’re going to see increased revenue.

How to Measure ROI in SEO

To measure ROI, you have to look at three things: targeted traffic, referral traffic, and conversion rates.

  • Targeted Traffic
  • Targeted traffic consist of the users who ended up on your website because they’ve expressed interest in your website’s products or services. You can tell what they’re interested in based on several factors like they keyword they use (someone searching “healthy dog food” is interested in finding healthier alternatives to feed their dog), whether they sign up for certain newsletters. Other forms of targeted traffic include but aren’t limited to:

    • Subscriptions (people who receive subscriptions from a product, service, or news from a business)
    • Repeat customers returning to your website
    • Registrations
    • Newsletter signups for their email

    It doesn’t matter how long or short a keyword is, but the fact that they are searching for a keyword that relates to your business can drive traffic. An effective SEO that can give you an ROI covers both short- and long-tail keywords so that your business stays relevant whether your traffic is simply browsing or deciding to purchase.

  • Referral Traffic
  • Referral traffic are the visits your website gets that don’t come from a search engine, but from other websites. One strategy in SEO is getting other reliable websites to link back to your website. In a way, it’s like that website is telling Google that your website is trustworthy for a specific product, so they would recommend your business to its visitors.

  • Conversion Rates
  • Conversion rates determines how many of the website traffic ended up becoming customers. This can be determined by looking at the number of sales (if the website allows visitors to buy products online) or by the number of people who send queries on the contact form (because these are the people who are no longer just browsing and are already interested in doing business).

    Because these are what can bring your revenue up, they’re necessary in seeing whether you have an ROI. To compute for your website’s conversion rate, it’s simple: simply take the number of sales or queries you have from the website and divide it by the total number of visitors.

  • Calculating SEO ROI
  • To calculate SEO ROI, your agency has to connect the data of your traffic with the conversion rate results. Only then can you see what your true ROI from your SEO strategy is. A good SEO ROI report can tell you how effective (or not) an SEO campaign is. It can also determine what key areas of the strategy need to be improved and suggestions on what can be done to go even further.

Is Your SEO ROI Report Complete?

A reliable SEO ROI report should contain the following:

  • Conversions related to the campaign
  • This is the percentage of users who, after the SEO strategy was used, end up on your website and end up becoming paying customers. This includes conversions from both SEO, SERP, and other targeted links.

  • Overall increase in conversions over time
  • ROI means your conversion rates should be higher than it was before the SEO strategy was implemented. A decrease or no change in conversion after implementation suggests that the SEO strategy didn’t bring you any additional revenue.

  • Conversions related to search engine traffic
  • How many people landed on your website via search engine results and ended up becoming a paying customer.

  • Overall increase in search engine traffic
  • Increase in search engine traffic is not a good measurement of ROI, but an effective SEO strategy can drive search engine traffic using the right keywords to lead to higher conversions.

  • Overall increase in unique users and traffic
  • When we say unique users, we mean counting the number of specific users visiting your website and not the number of visits. Your website could have a million visits, but over half of that is from around a hundred unique users re-visiting for updates, which isn’t a lot.

Remember: the end game of your digital marketing investment is not the top results in a search engine or getting thousands of website traffic in a month. Like any business, you want this investment to increase your revenue, and you can determine if it really is based on an efficient ROI report that can show you how much more business you gain from your SEO strategy.

Get in touch with us today to know more about SEO ROI and how our services can benefit your business.

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