If you‘re here to learn how to measure SEO return on investment, then you’re already on the right track ‒ because you’re thinking about what actually matters.
Sure, marketers can talk all day about how great SEO is…
But let’s be realistic: the only real way to know if SEO is worth it to you is to calculate its return on investment.
Yes, it is possible to reliably measure the impact of SEO on your bottom line. In fact, it’s much simpler than some marketers make it out to be.
We’ll tell you exactly how to measure the ROI of your SEO, step-by-step, so it’s easy to know if SEO is worth it for you.
How to Measure the ROI of SEO ‒ and the Impact of SEO on Your Bottom Line
It’s all too common for business owners to invest in some form of SEO and, at the end of the day, have no idea if that SEO is actually worth it…or if it’s money going to waste.
It doesn’t help that some marketers claim measuring the ROI of SEO is impossible. They’re either wrong, or dishonest.
As long as you have the right data, the formula you use to calculate SEO return on investment is pretty straightforward.
Here’s a quick and easy formula you can use to determine whether SEO has been worth your money in a specific period:
- (Value of Conversions – Cost of SEO) / Cost of SEO
There it is. And in the rest of this article, we’ll explain exactly how to get the data you need to fill in this formula.
Of course, we’d be lying if we said there are no challenges involved with calculating SEO return on investment. We’ll also help you cut through those challenges so you get the clearest possible picture of your SEO return on investment.
But first, let’s grab the data we need to measure the ROI of SEO.
Step 1: Determine the Cost of Your Investment in SEO
First, you have to calculate how much SEO cost you over the timeframe you want to measure.
When you work with a professional SEO agency, this step is as simple as it gets. You can find out how much you’re paying just by looking at the bill.
If you do all your SEO in-house, or a hybrid of in-house and agency SEO services, the breakdown will be more complicated. Some of the costs you’ll need to factor in include:
- Any in-house staff who contribute to on-page and off-page SEO, including content creators and copywriters
- Web designers and developers who contribute to technical SEO, as well as setting up SEO tracking like Google Analytics (more on that later)
- Monthly or annual subscriptions to SEO tools like SemRush, Ahrefs, or anything else you use for traffic analytics, site auditing, keyword research, list management, etc.
When you add these costs up, you’ll have a figure that can be used in your SEO ROI calculation.
Remember that these costs may change monthly. Don’t forget to take those changes into account when measuring your SEO return on investment for a specific timeframe.
Step 2: Measure Conversions From Organic Traffic
In a nutshell, organic traffic is any traffic to your website from a search engine that you don’t pay for directly.
Whenever someone clicks on your site in Google search results ‒ as long as it’s not one of your ads ‒ it’s organic traffic.
Since SEO is all about boosting organic traffic, conversions from organic traffic provide one of the best metrics for measuring the ROI of SEO.
To get that number, we recommend using Google Analytics to track your organic conversions. You can use it for free and it just works.
The way you set this up will depend on the way your business and website work, and we won’t go into too much detail here. Setting up conversion tracking correctly is extremely important, so we recommend getting help from an experienced developer or digital marketer.
Once you have Google Analytics tracking your conversions, calculating the value of SEO conversions is a breeze:
- For sales made on your website, simply segment conversions by channel and look at revenue for organic traffic. Narrow down the timeframe and you’ve got your number.
- For leads that come in through your website, this is trickier, because the actual conversion happens offline and not every lead converts. You need to assign a value to your leads overall and use that as your value. Best practice is to base that value on the average lifetime value of a customer multiplied by closure rate %.
Step 3: Use This Formula to Calculate SEO Return on Investment
After you’ve collected your data, plug it in to this formula to calculate your SEO return on investment:
- (Value of Conversions – Cost of Investment) / Cost of Investment
Here’s an example.
Say that organic traffic got you $100,000 in revenue over one year, and that the costs associated with SEO during that time were $20,000.
Put these figures into the formula above and we get:
- ($100,000 – $20,000) / $20,000 = 4
So for every $1 you spent on SEO, you got $4 back. This means you’re getting a 400% return on investment.
Using this formula, you can calculate the ROI of your SEO campaign over any timeframe you choose, as long as you know both the costs and the returns.
You can then use this data to help determine whether SEO is worth it for you or not…with a couple of important caveats.
We’ll look at those caveats next.
3 Challenges of Measuring SEO Return on Investment
Real-time conversion tracking has made it easier than ever to reliably measure the return on investment of your SEO efforts.
However, not even the best tracking tools can perfectly measure every facet of your organic search traffic. SEO is a time-consuming and complicated process with many moving parts.
Because of this, quantifying SEO return on investment will always be a bit of an art as well as a science.
Here’s what you need to know about the tricky part of measuring SEO and its ROI:
Challenge 1: SEO Costs Are Complex
First, measuring SEO ROI can be tough because of the sheer number of variables that contribute to a successful campaign.
An effective SEO campaign is based on a number of variables, from high-quality content, to link building, to technical SEO and more.
Having an agency handle your SEO makes quantifying these costs a breeze. You know how much you’re paying them, so use that figure in your calculation.
Tallying the costs of your internal SEO efforts is harder.
While PPC advertising has clearly identifiable click costs, SEO is about earning clicks rather than buying them. Those clicks are technically free. But the SEO you spend to get them isn’t.
You have to consider things like the cost of in-house labour (which you can break down by individuals or tasks), the SEO tools you use, and all the time you or your managers put into running that team smoothly.
It’s a lot, and you’ve got to get it right if you want a true picture of your SEO ROI.
Challenge 2: SEO Takes Time
When you’re doing SEO, it can be hard to tie specific investments and returns to work that was done in a specific timeframe.
That’s because it can take a long time for SEO to pay off. Quick wins are certainly possible, but there’s no guarantee.
From our experience and that of other reputable SEO agencies, we can estimate it will take 4-6 months for SEO to start ‘working’, meaning it begins to produce measurable results.
So, the simplified principle of comparing returns and investments over the same period does not quite work. It gives you a solid idea of whether things are working, but it’s not 1:1.
One way to get around this is to calculate ROI on a category, page, or keyword level, rather than an arbitrary time period, as Ahrefs describes here.
To learn more about SEO timelines, check out our blog post on how long it takes to get SEO results.
Challenge 3: Even ‘Perfect’ Conversion Tracking Isn’t Flawless
This problem isn’t specific to SEO.
But SEO is no exception.
The simple fact is that customer journeys are often more complex than any tracking software makes them seem.
Yes, Google Analytics will tell you if someone converted after visiting your website through an organic search. However, there may be things going on behind the scenes that you aren’t aware of or can’t track.
For example…say you watch a YouTube video about an interesting product. Then you Google that product, go to the website, and buy it.
Organic traffic gets 100% of the credit for that conversion…but it was really the YouTube video that got you there, wasn’t it?
Here’s another example with the opposite effect. Say you Google a product on your phone, find the website, and make a mental note of it. Later, you fire up your laptop and visit the website directly by typing the URL in your browser, and buy the product.
Since you switched devices, direct traffic gets 100% credit…but wasn’t that really an organic conversion?
You can see how customer journeys can twist and turn in ways that can skew your attribution.
So, no matter how well your Google Analytics is configured, you cannot always pinpoint exactly how many conversions you owe to SEO.
The more traffic and conversions you have, the more accurate it becomes, but it will never be perfect.
This begs the question: why even bother?
What You’re Missing If You Aren’t Measuring SEO Return on Investment
Put simply, not measuring your ROI is almost as bad as not doing SEO at all.
In spite of the challenges of measuring SEO ROI to pinpoint accuracy, you’re missing out on a lot of valuable data if you don’t do it at all.
The average business generates 53% of its traffic through organic search. Meaning that SEO does have an impact on the bottom line for most businesses. You can’t afford to ignore it.
And unless you know your return on investment for every dollar you spend on SEO, you can’t decide which strategies are working best, which you should scale, and whether something’s wasting your money.
Since SEO is a long-term strategy that generates results over time, you may not see a positive ROI right away. But once you’re past that, SEO will begin to deliver a return and can continue to pay dividends for years to come.
When that turning point comes, you won’t know it unless you’ve been actively measuring the ongoing ROI of your SEO work. And if you don’t know, you could end up pulling the plug on a profitable strategy just when it’s getting started.
If you need help moving the needle on your website’s search rankings, we are happy to help. Get in touch with our SEO Team to learn more about our services here at TrafficSoda.