Companies spend thousands of dollars a year on search engine optimization. In fact, bigger firms might even end up spending over $10,000 a month for a national or international campaign.
More and more marketers are realizing the return on investment (ROI) of SEO. That's clear from Forrester’s prediction that more than $103 billion will be spent on digital marketing, including SEO, by 2019.
Calculating the ROI of your SEO efforts may not be a walk in the park though.
How to Calculate Your SEO ROI
ROI is one of the key metrics used to calculate the performance of an organization. In terms of importance, it even overtakes other metrics like conversions and leads because it involves the overall cost of investment.
Even when it comes to SEO, ROI can be considered a key performance indicator. If your SEO efforts aren’t yielding enough returns on investment, it's time to redesign your campaign.
Therefore, it's crucial for businesses to calculate the SEO ROI for their campaigns. Are you getting enough out of what you invested? Is it really worth it? Let's take a look at two ways you can accurately calculate your SEO ROI.
According to Neil Patel, SEO ROI can be calculated as follows:
Source: Quick Sprout
Here, LTV stands for the "Lifetime Value" of the customer. The image below is an example of how to calculate this step-by-step:
Source: Quick Sprout
CAC refers to "Cost per Acquisition." This can be measured following the steps below:
Source: Quick Sprout
According to this formula, if a customer makes four purchases per year with an average purchase price of $60 and the gross profit margin is 10%, the lifetime value over five years is $120. This formula takes into account the average life expectancy, or the duration of time the customer is predicted to stay with the company.
The cost per acquisition is calculated as the sum of SEO cost per acquisition and base cost per acquisition. In this example, the SEO cost per acquisition is calculated as $40, whereas the base cost per acquisition is $20. The total cost per acquisition is then $60.
With the formula ROI = LTV – CAC, we can determine that ROI = $120 - $60 = $60. So, the ROI in this scenario comes up to $60, which is 100%.
You can also calculate your SEO ROI using this formula:
ROI = (Total Revenue from SEO – Total Cost of SEO Campaign)/ Total Cost of SEO Campaign
The only problem with this formula is that it may not be too effective for non-eCommerce websites. However, you can set up goals and define conversion values for those goals in order to get more accurate results.
A conversion could be anything from email opt-ins, demo sign-ups, or long visit durations. Anything that drives your advertising goals and results in visitors converting to customers can be measured.
Tips for Effective ROI CalculationAs already mentioned, it’s a bit more challenging for non-eCommerce websites to accurately calculate their SEO ROI. You could use an SEO ROI calculator tool, but if you really want to dig deep into your ROI, try some of these tips:
- Distribute ROI Responsibility. For every business, the buying cycle closely follows the pattern shown below:
Source: Quick Sprout
This is why the SEO team shouldn’t hold sole responsibility for creating brand awareness and ensuring ROI. Other points of contact like customer support, sales representatives, and solutions specialists should also put an effort into converting prospective customers.
- Separate Branded Keywords. Excluding branded keywords can help you conduct a more accurate analysis. Many visitors who are already aware of your brand will include your company name when conducting their searches. These searches can't be considered as part of your SEO efforts.
- Set up Customer Conversion Rate. Determining your customer conversion rate is one of the most challenging, yet important steps. To get a clear understanding of this factor, it would be necessary to work closely with the sales team. For instance, find out how many out of 10 leads result in a sale.
- Define Your Business Goals. Every company has its own business goals. While an eCommerce website aims to sell more products, a SaaS company could be aiming for higher demo sign-ups. Clearly define the conversion goals you wish to achieve through higher search traffic. You could use Google Analytics to set up goals, where you get to choose a template according to your business criteria.
How to Increase SEO ROI Like Mad
Now that you've calculated the ROI for your SEO efforts, you may be a bit disappointed. How exactly do you get a massive increase in your ROI? Apply the following tips to help boost your returns quickly.
Related Post: How to Make the Most of Your Images in SEO
- Target Audience by Location. Instead of spreading out your SEO efforts all across, it's best to focus on an audience at a specific location where you get business. More and more companies are starting to realize the importance of geo-targeted local promotion. Devoting your SEO efforts to a certain location increases your chance of getting higher returns on your investment.
In a study conducted by SEER, building SEO campaigns around a few locations had a significant impact on their client's ROI. In fact, this geo-targeting effort resulted in a 231% ROI within less than two months.
- Focus on Improving Your CTR. A higher click-through rate naturally improves your SEO ROI. Redesign your SEO efforts in a way that gets more people to visit your website. A low CTR could be due to a number of reasons. Maybe your title is not catchy, your CTAs aren't prominent, or you're using an old-fashioned SERP snippet.
Conduct an in-depth analysis of why your SEO efforts aren’t yielding enough clicks. This will help determine a proper strategy to make the right changes. Improving your CTR could be as simple as changing one word in your ad copy or landing page. This is exactly what happened in the case of Veeam Software. Changing one word helped them increase their CTR by a massive 161.66%. As shown below, “Request a Quote” was changed to “Request Pricing."
- Concentrate on Conversions, Not Traffic. No matter how much traffic you get, you won’t be seeing any ROI if you’re not making any conversions. What happens after visitors click on your ad and land on your page? Focus your SEO efforts on engaging visitors and encouraging them to take action. When your conversion rate improves, your ROI will also naturally improve.
There are a number of ways in which you can optimize your SEO efforts to drive conversions. You could switch to a more responsive design, add images to your landing page, use a catchier headline, or include videos to the page. In the case of Moz, email marketing and landing page optimization were the steps taken for a 52% sales increase.
- Educate Users Through Content. Content marketing is one of the most useful ways to optimize your SEO efforts and get better ROI. When you’re marketing a product or service, you need to educate your audience on how they can benefit from the features. The best way to do this is through content – whether it’s in the form of blog posts, ebooks, infographics, or videos.
The positive effects of content marketing on SEO ROI can be clearly seen with the online retailer Zagg. Zagg pays three writers to provide shareable content on trending topics while promoting its range of products. Their blog makes up for 10% of the website’s traffic and has resulted in an ROI of 172%.
- Use Influencer Outreach. Another method of effectively increasing your SEO ROI is to use influencers. Reaching out to people who are already popular can positively impact your audience’s purchase decision. And with the increasing popularity of social media, it has become crucial for brands to engage with their audience through popular channels. However, it’s not easy to build a social following and gain the trust of your target audience.
Choosing the right influencer for your outreach program is essential for successfully improving ROI. Maybe it’s a leading influencer in the industry, or even a blogger in your niche.
In a case study conducted by Visibilis, a new coffee brand utilized the power of influencers and blogs. By working with food bloggers and targeting niche bloggers through coffee-related campaigns, the brand was able to see a 243% increase in organic traffic in one year.
- Reach the Right Audience Through Guest Blogging. Guest blogging is an effective way to ensure that your SEO efforts are paying off. Through this, you can reach out to an audience that's likely to be interested in what you offer. Guest blogging also gives you a chance to be noticed by people who haven’t heard of you before.
Come up with content that matches the interest of your target audience and provide links to your own blog. You should also build connections with bloggers who have a certain level of influence in your related niche. A case study found in Effective Business Ideas shows that guest blogging improved search traffic by 342.35% for a site in just one year.
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There are numerous factors affecting the ROI of your SEO campaigns. It may be a challenge to control each of those factors. The best thing is to avoid juggling too many tasks, so you can start focusing on the most important aspects. Focus on implementing the tips mentioned above and you’ll quickly start experiencing a significant increase in your SEO ROI.