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Oct 08, 2021

SEO ROI – How to Measure ROI from SEO [FREE Calculator!]

SEO ROI Calculator

Need a quick answer? Put your numbers into our SEO ROI calculator below to determine your ROI, or continue reading to better understand how to find those numbers!

 

 

Many people who buy SEO services measure the success of SEO by how well they’re doing with specific keywords, the cost of their content output, or their own perceived ROI of their link building efforts.

While these are important factors to track, they don’t exactly measure how your investment is returning more money for your business. They only measure the cost of a specific deliverable that’s part of a larger SEO strategy.

Placing specific KPI restrictions on your SEO can seriously hurt your ability to increase traffic and sales to your site.

For example, if we look at the rankings of a single keyword as a measure of success, what’s really happening is that we’re investing all of your money in one opportunity that your competitors are likely also chasing.

If they outspend or outwork us, they win. And there’s not a lot we can do about that since we don’t know what they’re doing—outside of what we can see on their site and link profile.

If we measure ROI on content via cost-per-word and post-per-week metrics, we’re stopping our team from executing proper keyword research and building content that’s designed to rank.

Ultimately, content is much more about engaging copy and fulfilling searcher intent than it is about fitting in some keywords and hitting a word count goal.

If we measure ROI from the cost per link of our link building efforts, we’re limiting the targets that our link building team is enabled to chase (i.e., “I want links for $500 each” tells our team, “don’t chase that Forbes link that you can totally get if you spend 10 hours on it.”)

Not only that, but since we can’t know for sure how Google uses backlinks in their algorithm, we don’t really know how to place a value on a backlink.

If we can’t put a value on a backlink, how can we put a price on one?

So if ROI isn’t measured on link and content cost metrics, how is it measured?

Below are our methods for measuring the ROI of SEO work.

SEO ROI Formula

If you can’t measure ROI from cost metrics, what can you do?

Well, from a high-level, it’s best to look at the ROI of your SEO performance with the following formula:

SEO ROI = ((Gain from Investment – Cost of Investment) / Cost of Investment) * 100

To calculate this, you’ll need to gather the following data for your website:

  1. The lifetime value of a customer acquired via search
  2. Your organic traffic to sales conversion rate
  3. The total amount of traffic gained from SEO over the period you’re measuring (I suggest more than six months)

Let’s use this formula for a sample eCommerce site with the following metrics to determine their ROI on SEO:

  • Monthly SEO budget: $4,000
  • Conversion rate from SEO traffic: 2%
  • Customer Lifetime Value (in this example, cost of a widget): $100
  • Their SEO campaign has contributed to 100,000 additional visitors (a pretty realistic amount of growth for this budget level) over the last 12 months

So with this data set, we can piece together our formula to calculate their ROI:

  • Gain from Investment (100,000 new visitors * 2% conversion rate * $100 CLV) = $200,000.
  • Past 12 months SEO spend: $48,000.

So if we look at the ROI for the past 12 months of SEO work, it looks like this:

(($200,000 – $48,000) / $48,000) * 100 = 316%

Keep in mind that you may want to include other things in this number. For example, if you’re leveraging SEO traffic for remarketing, things can get a bit more muddy there.

How to measure changes in SEO ROI over time

SEO definitely takes time to show results. Most of the time, you won’t see much of an increase in traffic until after the first six months of working with an SEO pro or agency.

This can make it difficult to track ROI accurately if the first six months are foundational work.

A good workaround for this is to measure changes in SEO ROI over time to see if it’s headed in a positive direction.

This is accomplished by measuring ROI in segments of time and comparing them against previous ones.

The way we do it is by analyzing ROI for a given project every month, and instead of looking for a positive or negative ROI, we look for a positive or negative change in ROI.

Let’s run through an example of a site that, after six months, starts growing at 25% per month, meaning these are their traffic stats for the last 12 months:

Month 1

1,000 visitors

Month 2

1,000 visitors

Month 3

1,000 visitors

Month 4

1,000 visitors

Month 5

1,000 visitors

Month 6

1,000 visitors

Month 7

1,250 visitors

Month 8

1,562 visitors

Month 9

1,953 visitors

Month 10

2,441 visitors

Month 11

5,493 visitors

Month 12

6,866 visitors

With that, we can compile a more relevant data set for calculating ROI:

  • Starting traffic: 1k/month
  • Monthly SEO budget: $4,000
  • Conversion rate from SEO traffic: 2%
  • Average widget price: $100
  • Traffic stats by quarter based on 10% monthly growth rate:
    • Q1 New SEO traffic/sales: 0/$0
    • Q2 New SEO traffic/sales: 0/$0
    • Q3 New SEO traffic/sales: 1,765 (combined new visitors for Q3)
    • Q4 New SEO traffic/sales: 11,800 (combined new visitors for Q4)

Now, let’s look at the change in ROI for each quarter:

  • Q1 ROI = -100%
  • Q2 ROI = -100%
  • Q3 ROI = -70.58%
    • Gain from Investment (1,765 new visitors * 2% conversion rate * $100 widget price) = $3,530
    • SEO spend: $12,000
    • Q3 ROI = (($3,530 – $12,000) / $12,000) * 100 = -70.58%
  • Q4: ROI = 96%
    • Gain from Investment (11,800 new visitors * 2% conversion rate * $100 widget price) = $23,600
    • SEO spend: $12,000
    • Q3 ROI = (($23,600 – $12,000) / $12,000) * 100 = 96%

From the above data set, we can see that the ROI of this SEO project is improving over time.

This is a signal that the gap is closing and the SEO campaign is moving in the right direction.

As a result, we can safely conclude that continuing to run our SEO campaign is worth the investment, due to the improvements in ROI over different quarters.

How long does it take for SEO to drive positive ROI?

Here’s what you can expect from the first year of an SEO campaign, and how each of these milestones will impact your ROI:

  • Month 1 usually involves strategic planning, keyword research, industry analysis, and higher level planning. Ultimately, the SEO person or agency you’ve hired needs to pick up on things that are unique to your business, industry, and audience.
  • Month 2 is when most of the foundational work is taken care of. This involves making changes to your website design for improved user experience as well as technical changes, such as improving your site speed.
  • Month 3 is when content creation and link building kick in. For content, the first page might be published and optimized. By now, link builders may have found a sizable list of prospects, sent initial emails, and by the end of the month, they will be in conversations with link prospects.
  • Month 4 is when you should start seeing some of the link building work land placements. If links are landed early in the month, you should also start to see signs of high-level keyword movement for the pages that your newly earned backlinks are pointing to.
  • Month 5 is when your team has likely figured out what does and doesn’t work for link building campaigns. At this stage, they may begin to brainstorm more effective ideas and can begin making performance improvements to the outreach process. Meanwhile, your content team is still pumping out epic stuff.
  • Month 6 is when you should start taking a closer look at the data to see if you should keep going, or pivot your strategy based on what you and your team have learned. Usually, a good SEO campaign will have led to about 5,000 monthly visitors by now. This would be a good point to begin working on conversion rate optimization (CRO), as well as further optimizing existing content assets (blog posts, infographics, etc.)..

After the first six months, you should have two quarters’ worth of ROI data to work with that can help you make a decision about how to move forward with your SEO investment.

Keep in mind that the data at this point should be used to determine what direction you should take with your SEO strategy, NOT whether or not you should continue to invest in it.

If there’s demand online for the subject matter around your offering, there’s absolutely room in the SERPs for your website. Getting there, however, is a journey and requires a lot of collaborative and strategic thinking from intelligent, well-trained, and experienced minds.

This is why you can’t exactly use success or failure in a specific SEO campaign to determine the quality of your SEO team.

Instead, watch how they react to the data and how they’re able to think off of it critically to make directional decisions. This ability to adapt will help you determine whether your SEO pro, or agency, has the skills to help you succeed in search.

5 KPIs that drive SEO ROI and campaign success

SEO can easily get complicated.

There are over 200 ranking factors, according to Backlinko, and it would take way too much time to measure the KPIs on each of these variables.

Instead, here are five high-level factors you can look at to make sure your SEO campaign is moving in the right direction.

1. Conversions from search traffic

This could be whatever you decide to measure as a conversion (i.e., proposal requests, booked demos, etc.) based on the current stage of your business.

For example, early on, you may want to measure small conversion steps to track the successful movement of an SEO campaign, such as newsletter subscriptions.

Later on, when traffic has grown past 5,000 monthly visitors, you can most likely start measuring the output of sales from SEO traffic. Just make sure you properly set up your conversion tracking in Google Analytics so this is possible.

If you’re not getting sales, you may need to add additional team members to your stack.

For example, if you’re lacking in sales due to low conversions, consider hiring a conversion rate optimization (CRO) expert, since this type of work is entirely different from SEO.

Email subscribers not converting? Hire an email marketing pro to help with that.

The skill of converting traffic from a search to a sale is often outside the scope of work for SEO. SEO alone is about driving traffic. If traffic is coming in, the SEO is working. If sales aren’t happening off of the SEO, that’s a different problem that has relatively quick solutions.

2. Growth in organic traffic

If your organic traffic is going up, this is a sign that your link building and content development campaigns are well-executed.

Lots of SEO professionals look at keyword placements here as a primary KPI, but I try to steer clients away from that, since keyword placement is a driving factor of organic traffic and—not a revealing KPI to measure the success of an overall campaign.

Your traffic is likely to come from hundreds of different keywords and tracking all of those just isn’t possible.

3. Keyword position

As mentioned earlier, keyword positions shouldn’t be used as a primary indicator of SEO performance/.rganic traffic should be.

However, it’s still a good idea to track keyword positions at a high-level for a few primary keywords that you’re certain are important for your business.

When looking at keyword performance data, use it to make informed decisions about what moves to make, not as a deciding factor when analyzing the ROI of an SEO campaign.

Lastly, when conducting keyword analysis, don’t look at things as black and white.

In other words, don’t look at being in the top three as a win, and others as a loss.

Instead, measure progress over time with keyword placements and positioning. In SEO, you move up the positions slowly as you make improvements to your site and earn backlinks.

4. Keyword quantity and acquisition

If you put all of your eggs in one basket (i.e., only go after one or two keywords), you’re probably going to put yourself in a very high-risk position.

If you’re only chasing a few high-value keywords, it’s very likely that your competitors are chasing these, as well. This can drive up the cost of success for ranking high for such terms.

That’s why it’s a good idea to track how many more keywords your site is ranking for over time, like Ahrefs does here:

ahrefs-keyword-growth

What this tells us is that our domain ranks in the top three spots for 29 keywords, is placed in positions 4-10 for 329 keywords, and in positions 11-100 for 2,613 keywords.

This is a good signal that our content marketing efforts are being picked up and that new pages we’re creating are making it into Google’s index.

Through content improvements and link building, we should begin to see the top three and 4-10 numbers increase over time. Additionally, through these efforts, more and more existing pages will begin to rank higher, increasing our placements in the top three spots, as a result.

5. Link acquisition

For link acquisition, you mainly want to make sure that the time being spent on link building is resulting in links being acquired.

And there’s a lot that goes into link quality.

However, Google doesn’t disclose the details of their algorithm, and they change it every day, so there’s no way to know for sure what the big G is looking for.

On the other hand, from our experience with link building work, we can tell you that good backlinks (ones that actually move rankings) usually have the following characteristics:

  1. They come from trustworthy websites – This is why links from sites like TechCrunch, Business Insider, etc., are so valuable. They send valuable trust signals to your site and tell Google that your stuff is legitimate. If you think about it, this makes a lot of sense. Humans are trusting the things they read on these sites, so why shouldn’t Google?
  2. They contain relevant anchor text – The backlinks that have the biggest impact on your rankings contain anchor text that aligns with the keywords you’re trying to rank for. However, we want to be careful about overusing these anchors. Google has fail-safes in their algorithm, such as Penguin, to prevent people from being able to manipulate their rankings too easily with their link profile.
  3. The sites or pages linking to you are topically relevant – This is probably one of the most important factors. Google knows that the people who are looking for the topics you’re writing about are most likely reading other blogs, as well. They know what other keywords your audience is searching for and what other sites they’re visiting—so getting links on these sites will have a significant impact on your rankings.
  4. The link is “dofollow” – Google and other search engines ignore links with the “nofollow” tag attached to it. “Dofollow” isn’t really a thing. It just means the link doesn’t have a “nofollow” tag.
  5. The links are editorially placed – This might be the biggest thing Google is looking for. They’re using linking signals to rank sites since links are how they can see what pages people are backing up online. And editorial placements are tough, since securing them involves persuading people to link to something you made because they think it’s awesome.

So, what’s a good way to measure link acquisition? By measuring the cost per link over a longer period of time.

But not as a way to determine who you should work with for link building.

Instead, it’s a way to figure out what it costs to get a single backlink in your niche, for your site, so you can make better decisions about where to invest your link building efforts.

According to Siege Media, the average cost per link for outreach-driven link building can be as high as $1,000.

However, with a solid linkable asset, you can eventually drive down the cost per link over time with natural link acquisition, as they explain in this section:

cost-per-link-table

Therefore, definitely look at your cost per link, but use it to make directional decisions, rather than to decide who you invest in for this type of work. Any expert or agency who does it legitimately will probably be within a cost-per-link range of $500-$1,000.

Conclusion

Hopefully, after reading this, you have a way to accurately measure the ROI of your SEO and make well-informed decisions based on different KPIs.

Questions, comments, or anything to add? Drop it all in the comments below. 👇

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