Written by –

The ROI (return on investment) of SEO is important for any business owner to understand. It could be even more so for in-house and agency marketers. 

You can’t implement your important work if you can’t prove it’s a worthwhile investment.

Below, we’ll show you how to measure the ROI of SEO. Step by step. 

What Is the ROI of SEO?

The ROI of SEO measures the return on investment of all SEO activities. 

It’s the relationship between what you spend on SEO and the results you get. And it’s one of the most important concerns for any SEO consultant or manager. (Or anyone who does SEO, really.)

It helps tie your efforts to business goals. 

You’ll have a positive return on investment if the revenue generated by your SEO strategy is higher than its cost.

SEO isn’t a quick fix, though. And measuring your SEO ROI is complex because it takes time to see significant SEO results.

But it’s still an important KPI (key performance indicator) to measure.

The Importance of Measuring SEO ROI

The average business drives 53% of its traffic through organic search. Plus, almost every purchase today involves organic search in some way or another. 

So, it’s important to understand the financial value that SEO drives for your business. 

If you don’t know how much money you earn for every dollar you invest in SEO, it’s impossible to determine what’s working and what’s not. 

And while you should track other SEO KPIs, the ultimate measure of profitability is positive ROI.

If you can prove a positive ROI, you’ll have a much easier time proving success and generating buy-in from stakeholders.

How to Measure the ROI of SEO

The SEO ROI formula is simple. Very similar to calculating the ROI for any other type of investment. Essentially, SEO profit divided by SEO costs. 

Which means:

SEO ROI = (value of conversions – cost of investment) / cost of investment

Let’s dissect each.

1. Calculate Your SEO Investment

First, you need to calculate the cost of your total investment in SEO. 

Add all the costs associated with the channel. Use this as your investment figure. 

Typically, these costs can include:

In-House SEO Resources

These are employees who work on SEO 100% of the time. 

Some roles, like copywriters or developers, may only work on SEO tasks some of the time. In this case, break down their cost to an hourly or daily rate. 

Track their time spent on SEO tasks, and add it to your calculation. 

Freelancers and Agencies

It’s simple to track SEO investment for outside SEO agencies and freelancers. Because most agency contracts are on a retainer model, usually with a fixed monthly fee.

Add agency fees (or freelancer rates) directly to your investment calculation. 

Tools

If your team uses any SEO tool (like Semrush), take the monthly cost and add it to your calculation. If there are tools that other departments share, consider partially including the cost. 

Add up these costs. That’s your total cost of SEO investment. 

Note: These costs might change every month—that’s OK. Just account for any changes when measuring your ROI on SEO. 

2. Track and Analyze Conversions

Next, track and measure the value of each conversion. 

For this step, you’ll need Google Analytics (or a similar tool). It can help you quickly and easily measure your business’s revenue from organic search. 

But the type of conversions you track and the value you assign them are different for every business.

For example, ecommerce stores can use tracking to pull sales data from their online transactions. And accurately measure their revenue. 

But lead generation businesses have to set up goals (like form submissions) and assign them dollar values. 

Here’s how to set up conversion tracking for ecommerce and lead-gen businesses.

Tracking Ecommerce Conversion Values

To start collecting ecommerce conversion data, add ecommerce events to your website in Google Tag Manager

If you haven’t set it up yet, you can follow Google’s instructions

Once you start tracking, you’ll see an ecommerce report with detailed information about your transactions. 

In Google Analytics, go to “Reports” -> “Monetization” -> “Ecommerce purchases.”

Like so:

GA4 reports ecommerce purchases

Then, filter to organic traffic. 

Click “Add filter.” Then select Dimension: “Source Medium” and Dimension values: “Google / organic.”

And click “Apply.”

GA4 filter source

The detailed information is great. But we specifically want one number: the conversion value. 

So, click on the “Insights” icon on the top right. The tool will display the total revenue for the selected time frame. 

Like this:

GA4 insights total revenue

This is your total value of conversions. 

Tracking Lead Generation Conversions Values

Tracking conversions can be more challenging if you don’t make sales on your site.

Unlike ecommerce transactions, a lead (or a conversion) doesn’t have a specific associated value. Unless you assign one. 

You can do this in Google Analytics. 

Head to “Admin” -> “Events.”

track lead gen navigation

And click “Create event.”

GA4 create event

Then, create events for each of your conversions. 

These can be any actions that contribute to your business’s success. Like form submissions, free trial signups, or visits to a certain page. 

Let’s create an event for a form submission. 

First, give your event a name. Then select your “Parameter,” “Operator,” and “Value.” 

configure GA4 event

You should see your conversion under “Existing events.” Next, toggle the switch under “Mark as conversion.” 

GA4 mark as conversion

Now you’ll see your event as a conversion in the “Conversions” tab. 

conversions tab GA4

You still need to assign a monetary value to your conversion. 

To do so, go to your event. In the “Parameter configuration” section, click “Add modification.”

And in the “Parameter” field, enter a currency type (e.g., EUR) and enter the value (e.g., “50” for 50 euros).

modify parameter eur

Click “Save,” and you’re done. 

You can use this to help you to calculate the ROI of your SEO. Every time an event is triggered, a monetary value is assigned to it.

But how do you know how much value to assign to each event?

The simplest (and usually the most effective) way is by calculating:

Customer lifetime value (LTV) x lead conversion rate

Customer LTV is the total amount a customer is expected to spend with your business during the average lifetime of your relationship. 

And lead conversion rate is the percentage of leads you generate that turn into sales. 

Say the average lifetime value of a customer is $20,000 and your close rate is 15%. Your goal value should be set at $3,000. 

Of course, this is making certain assumptions. 

However, it’s a way to calculate the return for a business where leads are the main source of conversions. 

By this stage, you have the cost of investment in SEO and the value of your conversions. 

You’re ready to calculate your SEO campaign’s ROI.

3. Calculate Your Return on Investment

Once you have the numbers you need, calculating your ROI from SEO is easy.

Use the same formula you saw before:

SEO ROI = (value of conversions – cost of investment) / cost of investment

Let’s assume that in one month, your SEO campaign generated $200,000. And the cost of investment was $40,000. 

Plug these figures into your formula:

($200,000 – $40,000) / $40,000 = 4

Which means: for every $1 you spent on SEO, you saw a return of $4. 

In other words, your ROI is 400% (4 x 100 to get a percentage). 

That’s all there is to it. 

You can use this formula to calculate the ROI of your SEO campaign across any period you choose. So long as you know the costs and returns. 

Forecast SEO ROI

Now that you know how to measure the ROI of SEO, you can start to think about forecasting. 

Whether you work in-house or at an agency, you’ll likely have to project how much growth and revenue you expect to generate.

In any case, forecasting SEO ROI is important. It helps allocate resources, prioritize SEO efforts, and make adjustments. 

To start, consider the following:

  • Your website’s past SEO performance
  • Your traffic potential
  • Your average conversion rate 

To see your site’s SEO performance, plug your URL into Semrush’s Domain Overview tool. 

Head to the “Compare domains” tab and add your top four competitors. 

domain overview compare competitors

If you scroll down, you’ll see a monthly traffic trend graph. You can toggle between “Organic” and “Paid” to see if any competitors are driving traffic via PPC (pay-per-click).

domain overview organic vs paid

Scroll down further, and you’ll see two boxes: 

Top Opportunities” with keywords you should create content around. 

And “Keyword Overlap” to see the keyword intersect among your competitors. 

domain overview top opportunities

This exercise shows the connection between organic traffic and content in your industry. 

As for traffic potential, use our Traffic Analytics tool. Add your top four competitors. 

traffic analytics compare competitors

You’ll see the overall trend of visits, pages per visit, visit duration, bounce rate, and more. 

traffic analytics trends table chart

Take note of how overall traffic performance changes per quarter. 

You can also go to the “Top Pages” tab to see which pages get the most traffic. Then, click on “Show Insights” to find pages with growing and declining traffic.

traffic analytics top pages insights

Again, observe any seasonal changes. (Per quarter.) 

See how your site’s organic traffic performs compared to others. And look for trends that can help you forecast. 

Finally, consider your average conversion rate. You should have already calculated this if you’ve measured your SEO ROI. 

Create hypotheses based on all the data you gathered. Think about which SEO activities can create which outcomes and result in how many conversions (and how much revenue). 

Measure Your SEO Progress with Semrush

Knowing the ROI of your SEO is a powerful way to prove your efforts are working. And you can use it to get buy-in for additional investment in your SEO strategy.

Think about it—if you can prove a stable ROI on SEO, it’ll likely be easier to ask for further investments in talent, new tools, and more.

And if your SEO ROI isn’t where you want it to be just yet, you can use Semrush to help get you there.

Measure your current SEO performance, research competitors, and find optimization ideas all in one place.



Source link