How to Calculate The ROI of SEO
Measuring the ROI of SEO is tricky for a number of reasons, but mostly because it can be difficult to tell if the positive results we’re seeing in organic search can be attributed to something we did or is a result of a favorable algorithm update or some other marketing initiative.
That said, it’s imperative that you receive an ROI report because no business decision should be made without measurable results.
Yes, calculating ROI can be hard – but we can do hard things!
Why Measuring The Return on Investment of SEO is difficult:
Goal tracking – Are you properly tracking all types of leads?
Call tracking – This may be the most difficult. At the bare minimum, you should be tracking clicks-to-call. This is easy to set up via Google Tag Manager. The problem with clicks-to-call is that you don’t know the quality of the calls coming in. You can assume some percentage of these calls are accidental. So, without proper call monitoring, it’s difficult to relate clicks-to-calls to actual business transactions.
Google Business Profile – Formerly Google My Business, Google Business Profile is appearing more prominently than ever, which means fewer users are clicking through to the website to find business information. The phone number is in GBP, and so are other ways to contact or convert. If your SEO included any elements of Google Business Profile, it is important to include this information in your calculations and to carve out time to focus on this important platform.
Other marketing initiatives – Direct mailers, radio drops and television ads can cause more users to take to Google, which can result in a spike in organic traffic and conversions (usually coming in through the homepage). If you suspect any organic spikes are a result of a traditional marketing campaign, consider accounting for that data with an advanced segment.
Length of engagement – Good SEO achieves long-lasting results, but it can sometimes take months before these results start to take hold. There’s always a chance that you’re measuring the results prematurely and are not accounting for future returns. It’s always good to acknowledge this point. Return on engagement is another metric some businesses actually attempt to measure separately.
How to Calculate ROI of SEO
Here’s our simple equation for calculating ROI of SEO.
If you are driving lead forms, you’ll need to get at least two pieces of information.
- Inbound lead close rate – How many of the inbound lead forms does your team turn into sales?
- Average transaction value – This is pretty straightforward but can be difficult to answer, depending on your type of business. For example, some businesses have a mix of $100,000 transactions and $1,000 transactions.
Calculating ROI of SEO for E-commerce Websites
This calculation can be much more simple, as you don’t need to know the inbound lead close rate or the average transaction value – you already have that information in Google Analytics!
Other Considerations of Showing ROI
At Oneupweb, we prefer giving conservative measures of ROI that do not include new organic clicks-to-call. For a majority of our clients, new organic lead forms are our primary goal completion. Therefore, we only include new organic lead forms in our calculation. We don’t want to be accused of showing an inflated ROI that’s based on unreliable data, and that’s why we typically do not use clicks-to-call in our ROI reports unless specifically requested by a client.
Our reports are based on new organic leads. Therefore, we’re assuming that if we did nothing, organic leads would stay the same as last year or decrease. (There’s a cost to doing nothing, too). We don’t build that into our calculation, however. Our ROI formula does not account for hypothetical loss prevention – only gains.
So, it’s not a perfect calculation, but it is an effective way to measure SEO for large engagements. It’s even more effective when measuring smaller projects. For example, if you implemented 10 pages of new content, measure the ROI of that content alone. Using the method outlined here, the ROI will almost always be conservative. Again, we’d rather be conservative than misleading.
What about other metrics? We do like to account for other benefits that were a result of our SEO engagement, including new organic sessions, new organic users, new organic clicks-to-call and other actions on the website. However, these metrics are not typically included in the ROI calculation. They’re just happy notes for the client.
Here’s an example of one of our more recent ROI reports:
What’s the ROI of Your SEO Campaign?
At Oneupweb, our clients receive monthly performance calls and, at the very least, an ROI report for their SEO engagement. Some clients receive quarterly ROI report for their SEO engagement. We’re committed to transparency and accountability. If you’re not receiving an ROI report from your SEO partner, ask them “why not?” A and if you want someone else to hold them accountable, just give us access to your Google Analytics.