Understanding the Return on Investment (ROI) of your Search Engine Optimization (SEO) efforts is beneficial and essential. After all, to be successful and maximize profit for your business, you need to understand which marketing yields the best returns and the most cash flow.
I have been implementing SEO strategies for more than 20 years. In almost all cases, SEO consistently provides the best return on investment and the highest margins out of nearly every marketing or advertising tactic.
In this post, I will cover how to measure the ROI from SEO efforts for several industries and then demonstrate financial results using a case study of an e-commerce site that illustrates the monthly financial benefits charted over 12 months.
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Navigating Effort, Resources, and Success Factors
SEO takes effort and resources. The amount of effort, resources, and time to succeed depends on many variables that affect ROI and when you start to see positive financial returns. Some of these variables include, but are not limited to, the following:
Benefits of SEO
Google sees 8.5 billion searches per day (source). Most importantly, though, those searchers are warm, pre-qualified leads. We know they are interested in what we have because they had to type in the search terms, which is why SEO is so valuable. No other marketing tactic provides access to prospects like Google does.
Consequences of Not Tracking SEO Performance
Being clear about what your SEO goals are and what to track as success is essential to understanding its effectiveness. Otherwise, you’re flying blind. And what gets measured gets managed.
With Google Analytics (GA4) and Google Tag Manager, you can track exactly what behavior you want, such as form submissions, purchases, page engagements (i.e., 90% scroll), chat, link clicks, click-to-call phone numbers, click-for-driving directions, and more. (related post here on using GTM and Google Analytics).
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Tracking SEO ROI Requires Defining, Measuring Conversion Actions
Your business type will determine what conversion actions get measured and tracked.
Some variables may not go into an ROI calculation and are classified as secondary conversions. However, secondary conversions or behaviors are still necessary to track to understand better customer behavior and how to improve your SEO ROI.
For example, if you’re an e-commerce site, sales as a result of SEO efforts are the primary variable of ROI. In contrast, how many cart abandonments are essential to improve your success but would not be part of calculating ROI.
Why It Matters
It matters what conversion actions go into your ROI calculation because improving those metrics drives decision-making about necessary changes in strategy and tactics.
Assign Value to Conversion Actions
When you identify the most crucial conversion actions, you assign them value to calculate an ROI or ROAS (return on ad spend).
It's essential to consider the ultimate goal of your campaign and how each action contributes to that goal.
Here's a step-by-step Approach
Understand Business Objectives:
Clearly define what your business aims to achieve with the website or campaign—be it generating leads, sales, brand awareness, etc. Knowing the end goal helps attribute value to the actions leading up to it.
Identify Conversion Actions: List all possible user actions that can be considered conversions. This might include filling out a form, clicking on driving directions, purchasing, signing up for a newsletter, etc.
Assign Monetary Value:
Examples of Conversion Actions
Professional Services (e.g., Legal, Consulting, Accounting, Marketing)
Restaurant
Beauty Salon
E-commerce
Discover How Our Agency Can Drive More Leads and Sales To You
SEO - increase traffic and leads from Google
Content Marketing - from a data-driven topic strategy to awesome content
Paid Ads - Google Ads and Paid Social Media
The ROI Model
Calculating the ROI (Return on Investment) of SEO involves comparing the gains from SEO efforts against the costs incurred.
Here's a step-by-step guide to help you calculate SEO ROI:
1
Identify the Gains from SEO
2
Identify the Gains from SEO
3
Use The Formula for ROI
The basic formula for ROI is:
ROI = (Gain from Investment−Cost of Investment) / Cost of Investment ×100
Applying to SEO:
Case Study ROI Calculation for SEO Efforts
The below case study is for an e-commerce direct-to-consumer health product website. The niche is very competitive with other pure-play competitors and large, diverse conglomerates such as Amazon selling in the space.
We had been executing an SEO strategy for a year that was focused on the following SEO tactics:
SEO Growth Chart - Google Search Console
Below is a chart that shows the year-over-year organic traffic growth. The site has grown organic click traffic from Google by 462%. Excellent, consistent growth, but the real litmus test is in the financial returns of the SEO efforts and whether it generated positive cash flow.
Google Search Console Organic Traffic Growth
Calculating SEO ROI
So, we built a simple model that used the following data points to calculate ROI by month:
Example:
So, our ROI for one month looked like this:
(Net Sales from Organic Search + Net Total Recurring Lifetime Value) / Total SEO Cost
We calculated metrics per month for a year of SEO investment. Here’s what that looked like.
SEO ROI Trending by Month for 12 Months
Sales By Month Trending for 12 Months from SEO
New Organic Search Users by Month Trending
SEO ROI Grows Over Time
When an SEO project begins, it takes time to ramp up efforts. And it takes time for the investment to pay dividends, so you need to measure results over time.
How fast the growth and return on investment (ROI) grows is dependent on many variables:
In conclusion, businesses often struggle to measure SEO ROI due to its complex nature and timeline to see results. But remember, SEO is a marathon, not a sprint. It's a long-term investment that can yield significant dividends if done right.
Therefore, tracking your SEO performance is crucial, allowing you to optimize your efforts and calculate ROI over time.
The case study we've shared illustrates how focusing on content, technical SEO, and site optimizations can dramatically improve your online visibility and profitability.
This isn't an overnight success story but a testament to the power of patience, persistence, and strategic SEO practices.
As time goes on, SEO ROI compounds, delivering highly qualified traffic and customers at high margins. So, don't hesitate. Make SEO a core part of your marketing strategy today.
And if you're unsure where to start or how to proceed, consider partnering with experienced SEO professionals who can guide you on this journey. The road to SEO success may be long, but the results are well worth the effort.
