There are many misconceptions about what exactly SEO entails and the returns it provides. In this article, we’ll dispel those myths and focus on providing some practical advice you can use to the results you get from your SEO efforts.
We’ll talk about some basic principles that govern effective SEO performance and discuss the importance of tracking the return on investment (ROI) of your SEO campaigns. Finally, we’ll give you some recommendations for tools that are great for tracking and improving your ROI.
What is SEO and Why Is It Important?
The simplest way to define search engine optimization (SEO) is “getting your website found by people who are looking for something related to what you offer”. Successful SEO means that you’ll have a higher volume of targeted traffic coming in, which can then turn into additional business opportunities.
In practice, SEO increases visibility by creating websites and content that check the boxes that Google’s (or any search engine’s) algorithm looks for when ranking pages in search engine results pages (SERPs). The higher you rank, the more people you attract.
Research by Active Insights shows that 87% of users say search engines have influenced their buying decisions in the past 30 days. Over 70% report having clicked through organic search results to enter a site within the past 30 days.
These stats show just how integral SERPs are in helping us quickly locate the info we’re searching for. By proxy, they also highlight just how important SEO is for businesses with an online presence. People trust sites that rank highly on SERPs. SEO leads to higher site rankings.
What Are The Main Performance Metrics For SEO?
When it comes to measuring the performance of an SEO campaign, you have a ton of options:
- Monthly Search Traffic: A measure of the number of monthly visitors to a site. The higher your rank is on the SERPs, the traffic you’ll get from search. A successful SEO strategy can help provide relevant traffic and convert a portion of this into revenue.
- Bounce Rate: The percentage of people who leave immediately after accessing a website. This tends to be high when the site isn’t engaging people or addressing their queries.
- Average Time-On-Page: A metric showing how long people spend reading and engaging with a specific page on your site. A short average time on page might mean people aren’t finding the information they want.
- Marketing Qualified Conversion Rate: the percentage of people who viewed your content that handed over their contact information (emails, phone numbers, etc.) to receive further communications from you. It allows you to see exactly how your SEO efforts are affecting your website’s ability to convert readers into contacts.
- Purchase Conversion Rate: The number of sales that occurred directly from traffic generated by SEO. This will help you see how much revenue your site is generating directly through organic search and the rate at which it wins customers. Certain types of keywords have a higher purchase conversion rate than others, because they’re searched by people wanting to buy a product or service.
- Traffic Share: The percentage of traffic from search against other acquisition changels.
Why You Need to Calculate the Returns to Your SEO Efforts
While tracking raw SEO performance metrics like the ones listed above is crucial, it’s not enough when it comes to optimizing your SEO campaigns. You need to determine the ROI of your SEO efforts. Without it, you can’t fully understand the impacts of a campaign on your business’s revenue streams.
How is SEO ROI Calculated?
Calculating the ROI of an SEO investment is essentially a cost-benefit analysis to determine what you got for your money. The process of calculating the ROI of an SEO investment is relatively simple, provided you understand what figures need to be plugged in where.
Calculating the Costs of SEO
Calculating the cost of SEO within your organization is the first step in any ROI calculation effort. Typically, these costs can be broken down into two categories:
- Labor: The cost to have the SEO content in question produced, whether it was done in-house or was outsourced to an SEO agency like Embarque?
- Tools: The cost of any SEO tools or software purchased to help optimize the content.
Adding expenses from both categories together will give you the true cost of your SEO campaign.
Calculating the Benefits of SEO
The specific benefits of an SEO campaign vary from business to business along with things like business models, monetization strategies, and marketing goals. However, in ROI calculations, ‘benefit’ is usually translated as ‘revenue’.
To determine the revenue that an SEO campaign brought in, you’ll need (at least) to know these metrics: monthly search traffic, purchase conversion rate, and average lifetime value (LTV).
Example ROI Calculation
Imagine we purchased a landing page that ranks first on Google’s SERP for the keyword phrase “video editor”. The landing page cost $1000 and led to average monthly search traffic of 4,000. What is the ROI of this investment one month in?
The formula is simple: (Value of Conversions - Cost of Investment) / Cost of Investment = ROI.
In this example, calculating the cost of the investment is easy: $1000.
The value of conversions takes a bit more work to calculate, but it’s by no means difficult. All you need are your conversion rate and the average lifetime value (LTV) of a customer. Let’s assume a conversion rate of 1% and an average LTV of $100.
Here the formula is: Monthly Search Traffic x Conversion Rate x LTV = Value of Conversions.
In this example, that’s: 4,000 x 0.01 x $100 = $4,000.
Now, that we know the campaign is bringing in $4,000 in revenue, all that’s left to do is plug this figure into the original formula.
When we do that we get: ($4,000 - $1000) / $1000 = $3. For every $1 spent on the SEO campaign, we saw a return of $3 - or an ROI of 300%. Yes, an ROI of 300% is absolutely possible and has made multimillion-dollar companies out of online tools like VEED and Canva.
In the pursuit of better SEO and better SEO ROI, working with benchmarks in mind can be incredibly helpful. They help provide context about where you and your content stand in relation to your industry (and others).
- Click-Through Rate (CTR): The average CTR for a page ranked first on a SERP is 43.32%.
- Qualified Marketing Conversion Rate (a.k.a. MQI): The average MQI across all content varieties is 2.4%.
- Purchase Conversion Rate: The average purchase conversion rate across all industries is 4.31%.
Benchmarks like these not only help you contextualize your performance but also give you insights into how you can improve. Falling below a benchmark is often a symptom that can help you diagnose a much deeper problem within your content strategy.
When Should I Start Seeing Results from My SEO Efforts?
SEO is an investment in your business that pays off over the long term. The ROI of SEO starts to accrue immediately, but you won’t see exponential growth until about six months into a campaign. That means you need to practice patience when it comes to seeing results from your SEO efforts. If you’re not willing to wait for the payoff, you’re better off not investing in SEO at all - instead, focus on other types of SEM like PPC or content marketing which will provide more immediate results, but less explosive growth with high margins over a longer period of time.
SEO vs. SEM: Which Offers Better ROI?
While we’re topic of SEM and PPC, we might as well take a look at another question the often gets posed when businesses are structuring their marketing campaigns: does SEO offer a better ROI than SEM?
With PPC SEM you have to pay every time someone clicks on your ad. That means there’s a linear relationship between the investment you make and the customers you acquire. As we mentioned above, there’s no such relationship when it comes to SEO.
SEO relies on search engines delivering organic traffic in the form of potential customers who are actively seeking out the product or service you provide. That means businesses typically see exponential growth resulting from SEO campaigns.
Of course, this is just one approach to weighing the ROI of SEO against PPC. There are others that people use, but it’s safe to say that on average search-related campaigns offer a better value than ones driven by other types of SEM. So if you have the choice between investing in organic or paid traffic, go with the former first.
Tools for Tracking and Improving ROI
Hopefully, by now you understand the value of SEO and calculating the ROI of your SEO campaigns. Now, let’s look at the practical side of things. Several different tools can help you track the ROI of your SEO endeavors. Here’s just some of what’s available:
- Google Analytics - One of the best free analytics programs out there, Google Analytics helps you monitor the total number of unique visitors to your site and how they behave once on your landing page. It can also track keywords that users enter into search engines which then lead them to your website. The latter information can be used as a metric for measuring ROI (e.g., estimating what portion of revenue could potentially come from those searches). That’s why many people who use this tool also pair it with other types of software like AdSense or Google Search Console so they can get a complete picture of their SEO ROI. If you have a technical SEO specialist or an SEO-savvy technical person, you can even track the number of users that eventually convert into paid customers via search.
- Google Search Console - This is one of Google’s free tools for webmasters to help them see how their website appears in search results. It also offers analytical tools to help you track visitor growth and the conversion rates of people coming to your site from organic or paid search engines. It’s also the most accurate traffic estimation tool out there, showing the number of search impressions for given keywords.
- Traffic Travis - This program is great for those just getting started with SEO or who don’t need all the bells and whistles that come with the premium version. Since this tool is a bit more complex, it may be worth checking out their free trial before paying for an account. It gives you the ability to track multiple aspects of your SEO campaign - from visitor growth to keyword rankings and SEO ROI calculations.
- SEMRush - This is a powerful keyword research tool that also measures organic traffic from search engines and gives you an idea of how much it costs to get that traffic.
- WebCEO - This is a tool that offers both organic and paid SEM data as well as tools for tracking SEO and marketing ROI.
SEO is a great marketing strategy for generating solid ROI because delivers organic traffic that is actively seeking out the products or services you provide. Calculating and tracking the ROI of your SEO campaigns is the best way to make sure you’re getting the most out of your investment.