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The ROI of SEO

The world of digital advertising, in many ways, can be split into two hemispheres—social and search—and the boundary between them is often difficult to discern. You can market content on your social media channels, or you can buoy it up the SERPs (search engine results pages) through SEO strategies—or you can do both. Take this blog as an example. We’ve pushed it out on our LinkedIn and Instagram pages, but we’ve also optimized it with keywords, alt tags, mobile formatting, and sundry other SEO tactics so that it pops up when people Google, “How do I calculate the ROI of SEO?” We dedicate a lot of time to our blogs, so we need to make sure that the energy we’re investing in them gets us the results that we want. Some version of that quandary is on the minds of every other SEO agency, as well: ‘We’re sinking resources into this,’ they’re thinking. ‘What are we getting back in return?’


Now, when we say that the map of digital advertising is divided equally into social and search, our geography is, admittedly, a bit skewed. According to recent stats, social only accounts for 4.7% of web traffic, while organic and paid search make up 76%. Social is important, in other words, but it’s important the way a county highway connects outlying towns, whereas search is like the 101 freeway packed with 12 lanes of cars. Social is also more flashy than search. You blast content on social. You plan content through search—which is like the back-of-the-house Michelin-star chef, the researcher making the head litigator look good in the courtroom, the unsung hero and the multigenerational investment. Search is modest and search takes time, but if you do it right, you can reroute that 101 freeway of web traffic to your site.


Yet even though SEO strategies do so much behind-the-scenes work for you, this question must be faced: Are they worth it? In a previous blog, we discussed how social media impacts ROI. But how do you measure the return that you get on SEO? Time to get technical.

Measure What You Know

Correlating dollar amounts to SEO initiatives can get tricky—an informed guessing-game, but a guessing-game nonetheless—because the costs associated with them aren’t as clear-cut as PPC (or “pay-per-click”) marketing, where search engines charge you each time someone clicks on your ad. If you’re running paid ads, set up conversion tracking in a platform like Google Ads to figure out how many of those clicks turn into sales, then deduct the amount that search engines charged you from the revenue that you earned. (Tracking sales from products is usually easier than sales from leads, but we’ll unthread those distinctions later on.)


Search engines do not, however, charge you for clicks on organic posts, which is why determining how much you’re spending on SEO can be squirrely. But you can tab up how much you’re paying an agency, or the SEO team on your staff, to run your organic advertising. If you’re the client, you’re probably aware that agencies typically charge you per project or on a retainer basis. Dissecting both of these invoicing models into line-items of SEO versus paid costs is pretty straightforward. If you’re the agency, the calculus is more involved, but still manageable:


  • Ask your employees working on SEO campaigns to track their time per account.


  • Match the rate that you’re charging your clients for, say, creative, marketing, or web development against those hours.


  • Figure out the prices of all the SEO tools that you’re using. Our bet is that one of those tools is SEMrush, which you might have to shell out $119.95, $229.95, or $449.95 for, depending on whether you’re a freelancer, an SMB, or a conglomerate.


All of these variables—agency, internal, and tech fees—you can add up, plan for, and control. The deeper question is what the numbers mean. Is your unlimited access to SEMrush worth $449.95? Does the SEO agency’s work justify the cost of their retainer? 


Our advice is to research a few premium SEO tools and pick the ones that’ll give you the insights you’re looking for. (But, yeah, those tools are worth it.) Keep watch over the SEO results that the agency reports to you, but also give the campaigns they’re handling enough time to mature. The same caveat applies to running the numbers on how many hours one of your web developers is logging versus the results that come in. Comparing the 4.2 hours she worked on a landing page with the 1,619 impressions that that landing page garnered might mislead you into circular reasoning. (Because 1,619 impressions divided by 4.2 hours equals … well, nothing.)

… But Know Your Metrics

Even in creative agencies, the marketing team sometimes gets a rep for merely “measuring stuff.” But think about what they’re measuring—the market, a vast aggregation of products and services and innovations that’s always in flux. Measuring the market is akin to dipping a yardstick into the ocean. Start tracking the search performance for one website, and inside of a morning’s work you’ll have created a spreadsheet with five tabs and 1,000+ columns for each tab. Scrolling through all the numbers can get dizzying, and pretty soon you realize that unless you align KPIs with metrics, you’ll drown in the data.


KPIs are “key performance indicators,” and while that sounds similar to metrics, KPIs and metrics are not quite the same. KPIs represent strategic goals. Metrics tell you how close you are to achieving those goals. KPIs span multiple industries—marketing, operations, sales, finance—but some standard KPIs are number of qualified leads, order fulfillment times, dollar values for new contracts signed, or returns on investment. Metrics quantify KPIs, which means you gotta make sure that you’re using the appropriate counter for your goals. So if your KPI is your SEO ROI—sorry not sorry for all the acronyms—figure out which metrics will illuminate that big-tent business objective.


Marketers learn in their bygone college days to set SMART goals for their campaigns—that is, goals that are specific, measurable, achievable, realistic, and bound within a set timeframe. In the work-world, they learn that it’s smart to only unsheath a few yardsticks to track those goals. (Otherwise, you really will measure stuff endlessly.)


Choose 2–5 metrics that replicate the consumer funnel—from your audience’s first-touch impression to the final sale—and space them out according to the objectives that your campaign is trying to accomplish. Here are some metrics that you might consider analyzing:


  • Organic click-through rates, which pinpoint the ratio of users who viewed your post in the SERPs to the users who clicked on it and landed on your site.


  • Bounce rates track how many people come into your site and then bounce out of it. A high bounce rate tends to indicate structural SEO issues in your web architecture.


  • Pages per session measures how many of your web pages visitors flip through while clicking around on your site. Unlike a high bounce rate, a high number of pages per session often means that people like your content.


  • “Conversions” is the oddly spiritual euphemism that we marketers use when talking about sales. If you’re getting the word out about a volleyball convention in Omaha this year, your conversion is likely going to be the number of volleyball coaches who sign up for that convention. Depending on your campaign, though, your conversion might be anything—arborvitae trees shipped, marriage counseling sessions attended, virtual kombucha brewing classes subscribed to, or the number of times readers shared the stellar blogs of a certain San Diego-based agency.


Your call on your conversions. But whatever call you’re urging people to follow, if your overarching business concern is ROI, all these metrics should clarify rather than clutter up how much return you’re getting on your investment.

Track Conversions

To keep stretching this metaphor past its furthest limit: The world of marketing conversions itself can be parceled into two hemispheres—“hard” or “soft” conversions. 


A hard conversion might be a phone call, an online sale, or someone filling out a contact form. All of these actions show that customers intend to buy from you or are buying from you right now. A soft conversion indicates that they’re interested in you—they download your brochure, they click on your site, they share your content on their social media. They’re not purchasing from you, yet, but they are eyeing you with intrigue.


To track conversions with accuracy, you need to adopt a nuanced view of them. Are they intent-based or interest-based? Are you selling products or services? And perhaps the biggest consideration of all: Did you build your site as an ecommerce platform or to generate leads?


If you’re in the ecommerce game, tallying up conversions is simple enough. Remember those SEO tools that we mentioned? SEMrush and Botify will serve you faithfully, but get familiar with Google Analytics, too. Once you download it, follow these steps:


  • Open Admin > View > eCommerce. Click the rather alliterative toggle that lets you “enable enhanced ecommerce reporting.” (Got questions? Consult this guide, or work with a friendly developer about any coding issues that you encounter.)


  • Click on the “Conversions” tab of your Analytics view and select the insights that you’re interested in—shopping behavior, product performance, product list performance, and so on.


  • To zero in on data about organic traffic, segment these conversions according to channel. The metric you want to view here is “Revenue.” (Don’t we all?)


That metric lets you peer into submetrics like transactions or average order values, which are fairly easy to track in an ecommerce context because the purchase is frequently—though not exclusively—product-based. But even if your business is more lead-oriented, configuring ecommerce tracking can help you gauge how your site is performing with greater accuracy.


Now to explore the other hemisphere: Businesses whose primary conversion is lead generation. 


Ecommerce sales generally take place on your site, whereas the conversions of lead gen. companies tend to take place offline. That, in large part, is why we walked you through the metrics in the previous section—because the final sale is often the culmination of a strategy of previous touchpoints. But after you’ve aligned goals and metrics, you can still track them:


  • Once more, open Google Analytics and click Admin > View > Goals. You can choose from a template, a smart goal, or a custom goal. Click “custom.”


  • You’ll see another toggle for “Value” on the “Goal details” screen. Which begs the question: What is the value of your goal? First off, the values in lead gen. aren’t precise—at least, not in the way that ecommerce merchants can retail sneakers for $15 and multiply that sum by the number of people who buy their sneakers. But what you can do is dig into your historic sales data to figure out what percentage of your leads turn into sales.


  • Use those insights to take a fearless moral inventory of your operation’s customer lifetime value (or CLV). Let’s say your CLV is $10,000 and your close rate—or the percentage of leads that become customers—is 10%. You might assign each lead a value of $1,000. (That is, 10% of $10,000.) Granted, that’s a rough-and-ready calculation that’ll vary according to your service model and campaign goals, but you get our drift.


Let the numbers pile up for a few months. Then parse through the data at your disposal:


  • Click on Conversions > Multi-Channel Funnels > Assisted Conversions. Select “Conversions” at the top of the report.


  • Tinker with the settings to view a list of conversions across channels.


  • You’ll be able to look at social, referral, paid—and, yes, organic search.


See that dollar amount under the “Conversion Value” column? You’re about to use that number to calculate the ROI of your SEO.

Calculate Your ROI

At long last we arrive at the bottom-line takeaway, the roi of all metrics, the final figure and the thing itself: Your ROI.


Once you know how much time and money you’ve invested in your SEO, how your metrics ladder up to your KPIs, and the type of sale that you’re trying to close, figuring out your ROI can seem almost alarmingly simple. Here’s the formula:


(Value of Conversions – Cost of Investment) / Cost of Investment


Go back to the dollar amount under the “Conversion Value” column in the Google Analytics tabs that we mentioned in the previous section. (This is the “Value of Conversions” number.) Subtract the costs that we discussed in the first section. (This is the “Cost of Investments” number.) Then divide that figure by the same “Cost of Investments” number.


So let’s say that, in the last business quarter, the value of your conversions was $250,000 and the cost was $25,000. Here’s how you’d plug and chug those results into the equation:


($250,000 – $25,000) / $25,000 = 9


To find the percentage of your ROI, multiply the answer by 100—in this case, 9 x 100, or 900%. But because your boss, the project stakeholder, and the board of directors are way more interested in dollars than percentages, the takeaway here is that for every $1 you spent on SEO, you earned $9.


An SEO ROI of $9 is on par with recruiting Steph Curry to your pick-up squad or investing in Apple back in 1976—so excellent that it’s unrealistic. The numbers will rarely be this high, and they may even be so low that it’s hard to justify sustaining an SEO budget. To take another, more depressingly real-world example: Your conversions might be valued at $25,000, but you spent $250,000 on SEO in the same month. In that case, the formula would spit out these numbers:


($25,000 – $250,000) / $25,000 = –9


Multiply your answer by 100, and you can see that you’ve just earned an ROI of –900%, which is enough to put a cold hand on your heart. But that’s the thing about numbers: They don’t lie. If you monitor your SEO investments objectively, you can better strategize how to apportion your budgets to the channels that are performing the best. Without strategy and objectivity, well, stand by to empty your pockets very rapidly.

Adjust Your Attribution Models

All right, we admit it: This entire blog could’ve just been one line of copy—that formula above. “There you have it,” we could’ve said. “Off you trot.”


In a way, we duped you. But we blasted on for so long because the insights that the formula yields are premised on the type of conversions that Google Analytics measures. By default, it tracks “last non-direct click conversions,” or the last channel that drove users to your site. Thing is, last-click conversions provide a somewhat blindered view of consumer behavior. Studies suggest that users may need as many as 20 interactions with a business before they convert. So if you’re tracking how they acted during their 20th interaction, you can’t take into account the 1st–19th touchpoints that made them feel comfortable enough to buy from you.


Imagine that you’re a luxury resort and you want to find out which channels led your guests to book with you. If you simply track the last PPC ad that piped them to your site, you may not realize that they first saw one of your social posts, then read one of your blogs, then chanced upon some earned media where people raved about the pineapple-beetroot amuse bouche that you serve for breakfast on the patio overlooking the Pacific—before finally seeing that last PPC ad, clicking it, and reserving a room for a weekend getaway. All these other touchpoints (the social content, the blog, the reviews) did their part in urging customers to click on that last paid ad. Which is why another function of Google Analytics, the “Assisted Conversions Report,” can give you a more nuanced view of how your audience engages with your brand than the standard analytics report generally delivers.


To view your assisted conversions, click Conversions > Multi-Channel Funnels > Assisted Conversions. The screen that appears should lay out a number of columns side by side—including channels, assisted conversions, and last-click conversions. All the channels connect, so this report helps you see how they route users through the slip ’n slide of your funnel and into your site, as well as the dollar value of the connections—rather than just the dollar value of the conversions.


Another attribution model to look at is Top Conversion Paths. (Conversions > Multi-Channel Funnels > Top Conversion Paths.) This report lists the most common channels that your users click through before converting. (Most people get your email newsletter and then type your URL into their browser, for instance. Or they search on Google and click one of your paid ads. Etc.) Other attribution models to consider:


  • First Attribution: The opposite of last-click conversions, this metric credits the sale to a customer’s first touchpoint with your business.


  • Linear: Gives equal props to every channel that chutes customers into your site.


  • Time Decay: Like “Linear,” this one credits every channel for getting customers to convert, but lends more emphasis to the channels closest to the sale.


Studying consumer behavior online can get so complex that, in some ways, it’s a doomed endeavor. (How do you plumb the ocean with a yardstick?) But depending on your KPIs, a savvy marketer should be able to analyze these nano-metrics and inform you which dollar values to plug into your ROI formula—even if, ultimately, those values are just one feather off the fowl.

So … What’s the ROI of SEO?

‘Enough with the fancy terms,’ you’re probably thinking. ‘I get how to calculate this stuff. But what’s a good ROI of SEO?’


Allow us, once more, to be cagey: Every business is different, so the money that you get back on your SEO will depend on a lot of factors—how much you’ve invested in it, how fiercely your competitors are optimizing their own SEO strategies, how often you’re monitoring changes to Google’s algorithm, and so on. With that said, here are a few guidelines to keep in mind:


  • Compare different metrics across similar timeframes. One late-night session sussing through troves of data where you accidentally compare monthly investments to quarterly returns can throw your budget into wild (albeit likely temporary) disarray.


  • SEO takes time. Generally, you won’t start seeing results until 3–6 months. But if you’re still not getting returns after 6 months–1 year, something’s probably rotten in the state of your SEO marketing strategy. (Like the budget you were balancing during that late-night work sess.)


  • Before you spend money creating new SEO content, optimize the content you have. If your site has 5,000 pages but only 1,000 of them are optimized, 80% of your current content is, digitally speaking, dead space. Monitor your SEO presence so that you can fix any technical issues and rank higher in the SERPs—which, in turn, will elevate the rankings of the content that you produce in the future.


So what’s a good ROI for your SEO? The way we’d answer that is by running analytics on your site, researching your target audience, talking to you about your messaging goals, and coming up with a brand development plan that helped lower your customer acquisition costs over time. Reach out today and learn how we can help you chart your course through the world of digital marketing.

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