Understanding the ROI of SEO

By December 1, 2017 No Comments

If you’re a business owner who has even a basic understanding of SEO, then you know how difficult search engine optimization is. From anticipating and responding to changes in search engines’ algorithms to picking and using the right keywords and much more, there are many factors that make one SEO strategy more or less successful than another.

While search engine optimization is certainly challenging, measuring the return on your investment in SEO is not without its own set of difficulties. Most entrepreneurs instantly think about how much money they’ve made from a given investment when they’re factoring their ROI. Looking at ROI this way makes calculating your return on an investment pretty easy.

Here is the equation to calculate your ROI in dollars and cents:

ROI = (Revenue from Investment-Cost of Investment)/Cost of Investment

The Value of SEO

While the calculation provided above makes it easy to calculate the monetary return on an investment, calculating the ROI of SEO isn’t that simple. Why is that the case? It’s because the goal of a search engine optimization strategy isn’t always to make money. Some of the common, not necessarily bankable goals of a SEO campaign include the following objectives:

  • Increase brand visibility
  • Reinforce branding
  • Improve credibility and trust
  • Provide better insights into consumer behavior
  • Build goodwill

Another common goal of SEO is to improve where your website ranks in organic searches, which can increase your click through rate. In general, the higher your website ranks in SERPs, the better your click through rate will be. If your site is ranked first in search results, you’ll normally get about 30 percent of the clicks on the page. Your click through rate will typically drop to 12 percent if you rank just two positions lower and it will fall even further, to about two percent, if you rank in the ninth or tenth position in SERPs.

Your click through rate is important because a higher click through rate is often associated with an increase in conversions and, as you’ve probably already guessed, sales. While you may think that would make it simple to calculate your ROI on SEO, it doesn’t. That’s because it’s often difficult, if not impossible, to determine what led someone to ultimately make a purchase from your business, especially if you’re running multiple SEO marketing campaigns simultaneously.

Choosing an Attribution Model

There are many touch points that consumers ordinarily encounter during the buying process. With so many variables involved in the process, it can be nearly impossible to figure out which touch point actually motivated someone to buy something. This makes calculating your ROI on SEO accurately something of a guessing game in some cases.

If you want to try to determine your ROI on SEO with any degree of accuracy, you should begin by choosing an attribution model. Your attribution model will be what you’ll use to allocate credit to each of your marketing channels, including your SEO. There are plenty of attribution models to choose from, but you must pick one that is appropriate for your specific business and industry.

The most common attribution models are the single-source models which measure first and last touch. The first touch model gives credit for a sale to whatever marketing channel initially led a consumer to your website. By contrast, the last touch attribution model gives credit for a sale to the last marketing channel that brought someone to your website.

While the first and last touch attribution models work well with marketing automation and CRM systems that only have one field to store attribution information, they’re flawed. That’s because they don’t account for any of the touch points that take place between someone’s first and last interaction with your website.

For this reason, using a linear attribution model might be the way for you to go. Linear attribution models give some credit to every marketing channel that might have influenced a shopper’s decision to make a purchase from your business.

Use Google Analytics

While you may feel like just choosing an attribution model makes calculating your ROI on SEO difficult enough, you can relax because Google Analytics has an attribution modeling tool built into its platform. This valuable tool enables you to compare several attribution models to determine which of your marketing channels are providing the best results. With this tool, you can see how your SEO strategy is performing compared to your other marketing efforts.

Calculating the ROI of SEO

Clearly, converting the ROI of SEO into dollars and cents is challenging, but calculating your ROI in other contexts doesn’t have to be as difficult. In fact, in many cases you can use the formula we provided near the start of this blog post to calculate the return on your investment in SEO in other ways.

If the goal of your SEO marketing campaign was to increase the number of clicks on your website, you can modify the ROI calculation to look like this:

ROI = (Clicks on Website-Cost of Investment in SEO)/Cost of Investment in SEO

While that calculation will not tell you how much money you’re made from your investment in SEO, it will reveal how your investment is paying off in the context of your goal, which may be even more meaningful than knowing what your return is in dollars.

Looking at the Big Picture

There’s a reason investing in SEO has been compared to investing in the stock market over the years. And that’s because you have to be patient and wait out the ups and downs your SEO marketing will experience over the long-term in order to record a meaningful return on your investment in search engine optimization.

While calculating the ROI of SEO may not be as easy as you’d hoped, choosing to use the SEO services provided by PixieCutLabs to boost your ROI is simply the best decision you can make. At PixieCutLabs, we specialize in creating and implementing effective SEO strategies that yield the highest ROI possible. Whether you want to increase your leads or sales or you want to improve your company’s reputation, we can help you get the best return on your investment in SEO. Contact PixieCutLabs to learn more today.

Brennen Bliss

Author Brennen Bliss

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