What is SEO ROI and How to Calculate it?
Posted on: November 2, 2022 6:55 PM
DIGITAL MARKETING > SEO
Before we get into the return on investment SEO brings it is important to know what SEO is. Search engine optimization or SEO is a way to allow your business to pop up at the top of the search engine results page. Search engine optimization (SEO) can be done both in-house or via an agency. While SEO is based on increasing web traffic, Lead generation focuses on improving the number of clients or potential customers for your business.
Read More: What is the Difference Between On-Site, Off-Site, and Technical SEO?
They may have different functions, but they can still complement each other and drive awareness for the business via organic traffic to the site. Just like any other return on investment, the SEO ROI is also defined as what you are getting in return for having paid for SEO. It is only of value when the return you get is higher than the cost you incurred for the service.
When looking for data on the ROI of SEOs not a lot of statistics will pop up. Mainly because it is not studied. However, companies use their own data and assess the trends for ROI for SEOs and what is considered good. According to the estimates of Profitworks, the average ROI of an SEO is $2.75 for every dollar spent. In other words, an ROI of 275%. According to FirstPageSage, it comes up to an average of 748%. Tarakeet shows ROIs of clients scaling up to 500% and even 1220%. [1]
The ROI of SEO can be measured by using a simple formula:
(Gain from Investment – Cost of Investment) /Cost of Investment
Despite the fact that the formula exists there are still other ways to determine if the SEO campaign is worth the time and effort. One way is to compare the return with the returns that you have gained thanks to the other channels in place for marketing.
While this doesn’t give true statistics about the ROI of SEO it is still a good way to measure if the campaign was worth the while. Another way to understand the ROI is to see its trends over time.
While display advertisement or paid search has a set payment, you know what you are paying for what. Regarding SEO, the costs that are incurred vary in regard to the following factors.
When are we going to see the fruits of our hard work? That is a question we always ask ourselves. It is no different when it comes to business. So when we will see the results of SEO is also an important question that is asked a lot.
The simple answer is 3-6 months. This is how long it takes to gain traction, once you have that it only grows. The SEO ROI is more important since updates get better over time the longer they are left in place. Gaining momentum in the SERP makes it simpler to rank for keywords with more traffic and higher value, which translates into more sales and income.
Let us take an example of the breakdown of this time.
While calculating ROI for a keyword there are a few simple steps
All of this work can be done using Microsoft excel while the analysis data can be downloaded from Google keyword planner.
The cost of your existing SEO initiatives and KPIs (key performance indicators) are two aspects that go into calculating SEO return on investment (ROI). Making informed business decisions and adjusting and optimizing your plan are both made possible by tracking these crucial indicators on a regular basis.
Utilizing the ROI Analysis report and the Cost Analysis report, ROI analyses may be performed in Google Analytics. You may determine the ROAS of various marketing initiatives using various attribution models by using these reports. The easiest way however is to set up conversion values in Google analytics. The ROI analysis in Google Analytics is carried out using ROAS (i.e. Return on Advertising Spend).
Suggested Read: How to Optimize Your Digital Marketing Strategy?
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While calculating the ROI of an SEO is difficult, it is still not impossible. The main reason that makes the calculation hard is the data and unsure of how much will be earned over what time period. While the cost associated with it also varies based on how you run your business and what you outsource.
Regardless, we looked over some ways to assess the effectiveness of your SEO as well as how to calculate the ROI of a keyword in your SEO. Not only that but google analytics also makes it easy to get an overview of how the SEO is performing.
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References
[1] Marketing ROI – ProfitWorks