How to Measure the ROI of SEO
Measuring SEO’s return on investment puts the impact of SEO into perspective. You can show company decision-makers how SEO has generated traffic, leads, and sales, for example, which can lead to continued investment in this strategy.
Got questions about how to measure the ROI of SEO?
Keep reading and learn how to calculate SEO’s ROI with Google Analytics, whether as an ecommerce or lead-based business! For professional help improving your ROI from SEO, connect with WebFX. We’ve helped our clients generate impressive results from digital marketing strategies like SEO, including more than $3 billion in revenue.
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What is SEO ROI?
SEO ROI is a calculation that measures the return on investment of search engine optimization. Companies can calculate SEO’s return on investment by looking at search engine rankings, organic website traffic, and goal completions, and then using the ROI SEO formula: (Gain from Investment – Cost of Investment) / Cost of Investment.
How to calculate the ROI of SEO
Learn how to calculate the ROI of SEO in three steps:
1. Set up conversion tracking
The first step in determining your ROI from SEO is setting up conversion tracking in Google Analytics. This allows you to track all of the conversions on your site that earn revenue.
The setup you use depends on whether you make sales directly on your site or not.
Ecommerce stores can use ecommerce tracking to pull data from their online transactions and measure their exact online revenue. This means the data for online returns is extremely accurate.
Lead-based businesses, like service providers, can set up conversion goals like lead form submissions and assign dollar values to those goals based on customer data.
Here’s how both types of businesses can set up conversion tracking on their sites:
Ecommerce: How to set up conversion tracking for measuring SEO’s ROI
The best way to track revenue from an ecommerce store is to set up ecommerce tracking using Google’s instructions.
Once you start tracking ecommerce data on your site, you’ll be able to access an Ecommerce Overview (Conversions > Ecommerce > Overview) report with all of the information related to your online sales.
This report is useful for measuring your site’s overall success and monitoring your performance. So even if you aren’t planning to calculate your ROI from SEO immediately, we recommend that you set up ecommerce tracking as soon as possible.
The sooner you start collecting data, the more you’ll have to work with when you decide to start digging into Analytics more.
Lead generation: How to set up conversion tracking for measuring SEO’s ROI
If you don’t make sales directly on your site, it’s a little more difficult to get exact data on how much revenue you generate. The most accurate estimate comes from assigning dollar values to each of your on-site conversions based on past sales data.
Navigate to Admin > View > Goals in Analytics and create goals for each of your on-site conversions. These goals can range from contact form submissions, free quote requests, and even phone calls if you have call tracking set up on your site.
Then, enter an estimated value for each of these conversions in the Goal Details section.
These values won’t be exact, but if have some analytics data to pull from, you can get a pretty accurate estimate.
- Determine how many of the leads convert into sales. For example, if you get 100 lead forms per month and 25 of those leads become customers, that goal has a 25% conversion rate.
- Determine the average value of each sale. If each of the leads that convert spends $200, your average value is $200.
- Determine the value of each lead. Determine the value of each lead by dividing the total value of conversions by your original number of leads. Using the values above, if you earn 25 customers and they each spend $200, you make $5,000. Divide that $5,000 by your original 100 leads, and each lead from this goal is worth $50 on average.
Follow this formula for each of your goals and enter the corresponding values before moving on to the next step.
2. Sort your conversions by channel
After you’ve tracked conversions for a month or so, you should have enough data to start measuring your ROI from SEO.
The simplest way to do this is by viewing the Conversions report at Conversions > Multi-Channel Funnels > Assisted Conversions.
Select “Conversions” at the top of the report, and you’ll have all of the conversions on your site within your selected time frame sorted by the channels that drove them.
The Organic Search channel includes all of the users who found your site in the results of search engines like Google and Bing – meaning you can attribute those conversions to your SEO strategy.
3. Calculate your SEO ROI
One you’ve determined how much revenue your SEO strategy generated during a specific time period (typically a month or a quarter), you can compare that amount to your SEO investment during that time to determine your ROI.
Most businesses use the following formula to calculate SEO’s ROI:
(Gain from Investment – Cost of Investment) / Cost of Investment
If your company already has a method for measuring the ROI of your other marketing channels, you can use the same formula to compare SEO against them.
For example, some companies calculate ROI using the net profit from each sale instead of the total revenue. Be sure to use those same values for your SEO strategy, or your comparison will be skewed.
If you don’t have an existing method for calculating your marketing ROI, you can use the basic Investopedia formula, (Gain from Investment – Cost of Investment) / Cost of Investment. Then, multiply the resulting number by 100 to get your ROI in terms of percentage.
Using the data below, here is the SEO ROI formula in-action:
Gain from Investment: $704,087.50
Cost of Investment: $10,000
(Gain from Investment – Cost of Investment) / Cost of Investment
(704,087.50 – 10,000) / 10,000
60,087.50 / 10,000
6.00875 *100
600.875%
The company’s return on investment from SEO is more than 600% — that’s massive!
2 other Google Analytics reports for measuring SEO’s ROI
Depending on your business and setup, you can reference a few other Google Aanlytics reports to help measuring your ROI from SEO.
The following reports are closely related to your ROI, and compiling them along with your original calculation can give you a big-picture idea of how your strategy is performing.
1. Assisting Interactions Analysis
Most of your customers will visit your site multiple times before converting, whether that conversion is a purchase, a lead form submission, or something else.
For example, a user may discover your site in search engine results and spend their first visit browsing your product pages, then leave without buying anything. Later, they could return to your site by typing your URL into their browser, coming directly to your site, and making a purchase.
Depending on the conversion attribution model you use, you could have a skewed idea of where that customer came from.
If you only look at last interactions, for example, you’d think that it was a sale from direct traffic. You wouldn’t be necessarily wrong, but this model leaves out the fact that their original visit was from organic search – meaning that the sale likely wouldn’t have taken place without SEO.
In this example, Organic Search assisted in the conversion. The Assisting Interactions Analysis report (Conversions > Multi-Channel Funnels > Assisted Conversions) shows events like these and the value in the channels that don’t directly lead to conversions, but play a role in them in the earlier stages.
This gives you a more in-depth idea of the value of each of your channels by considering the role they play in conversions, even when they aren’t the final interaction.
2. Top Conversion Paths
Along the same lines as the Assisting Interactions Analysis report, the Top Conversion Paths (Conversions > Multi-Channel Funnels > Top Conversion Paths) report considers all of the steps that lead to conversion.
But instead of showing each channel’s separate contributions, it shows the common paths your users take to converting.
In this example, the most common path users take is finding the site via Organic Search, then later coming back to the site directly and converting.
This report is useful because it gives you a better idea of how your customers interact with your site and other channels before making a purchase or becoming a lead. And the more you understand your customers, the more effectively you can structure your campaigns moving forward.
FAQs about measuring ROI for SEO
Do you have additional questions about measuring ROI for SEO? Browse our FAQ!
When should I measure SEO’s ROI?
Generally, you’ll measure SEO’s ROI on a monthly, quarterly, and yearly basis. Since SEO is a long-term strategy and takes time to generate results, you probably won’t see a positive ROI in the first three to six months. After this initial period, SEO can start delivering a return — and continue providing one.
How do I measure SEO’s ROI?
Measure SEO’s ROI with the following formula:
(Gain from Investment – Cost of Investment) / Cost of Investment
Calculate your expenses for investing in SEO to get your “Cost of Investment,” and then reference your Google Analytics data to get your “Gain from Investment.” Substitute your numbers in the formula, and you’ll get your ROI from SEO.
What is a good SEO ROI?
A good SEO ROI depends on your business.
Every company is different, which makes assigning an average or good SEO ROI difficult. While one business invests $1500 per month into SEO, another spends $3000. Not to mention, lead values vary from company to company.
Before you start optimizing your site for SEO, think about brainstorming an ideal ROI for your business. This number can serve as a benchmark for your team or agency to measure against itself. For the best results, start with a small percentage and then work towards a larger one as you gain data.
Get a stronger ROI from SEO with WebFX
A well-structured SEO strategy can produce impressive ROI for businesses in all industries – and if yours isn’t where you’d like it to be, WebFX can help.
We keep the focus on ROI right from the start, and create custom strategies for each of our clients with the goal of providing the best returns possible.
For more information about our organic SEO services, contact us today and get a free quote!
