SEO ROI is the return on investment from your search engine optimization (SEO) efforts. It measures how much profit you generate from your SEO campaigns compared to how much you spend on them.
The ROI of SEO shows how profitable your SEO campaigns are, or, if you're a content marketing or SEO agency, how profitable your services are from your customers' perspective.
We'll focus the rest of this post on calculating SEO ROI for your clients as a content/SEO agency. However, the same steps and formulas apply if you want to calculate the SEO ROI for your own campaigns.
The SEO ROI formula
To calculate SEO ROI, you use the following formula:
ROI of SEO = [(SEO revenue−SEO costs) / SEO costs] × 100%
- SEO revenue is the total amount of money your client earns from your SEO campaigns, such as from organic search traffic, conversions, or sales.
- SEO costs represent the total amount your client invests in the SEO campaign, including the fees they pay you for content creation and software tools, services, or other resources.
For example, an SEO ROI of 200% means that for every $100 your client spends with you on SEO (assuming they outsource the entire operation to your agency), they get $200 back in profit.
A positive ROI indicates that your SEO strategy was successful and profitable.
The importance of SEO ROI for content marketing agencies
SEO ROI is an important metric for content marketing agencies because it helps them to:
- Demonstrate the value of their services to their clients and justify their fees.
- Optimize their strategies and tactics for each client by measuring the performance of their SEO campaigns and adjusting their actions accordingly.
- Allocate resources and budget for each client more efficiently by deciding how much to invest in each client and each project based on potential returns.
FYI: StoryChief eliminates the need for various tools such as social media tools, automation tools, AI tools, SEO tools, and analytics tools. Create a free account and start publishing today. 🙌
3 challenges of determining SEO ROI
Though it seems easy, measuring SEO ROI isn't always straightforward. There are some common challenges that content marketing agencies face when trying to calculate their SEO ROI, such as:
#1 The large delay between an SEO strategy investment and its return
SEO is a long-term investment strategy that requires consistent and continuous efforts. It can take months or even years to see an SEO campaign's results.
Consequently, there's a large gap between when your client spends their money on content and SEO and when they see a positive ROI on it.
The delay between investment and return means you must account for the changes in the value of money over time. You can overcome this challenge using a discount rate or a net present value (NPV) method to adjust your calculations.
#2 The problem with marketing attribution
Marketing attribution involves assigning credit (read: value) to different digital marketing channels or touchpoints that influence a customer's journey. For example, a customer may visit your website through organic search, then click on an email link, then watch a video, then make a purchase.
The problem with marketing attribution is that there is no definitive or universal way to determine how much each channel or touchpoint contributes to the outcome.
Depending on how you weigh or distribute the credit or value to each touchpoint, you'll get different results, making it difficult to calculate SEO ROI accurately and consistently.
#3 No clear way to measure SEO's impact on retention or churn rates
The proportion of customers that remain loyal to you for a certain period of time is referred to as the retention rate. The churn rate is the percentage of customers who leave your business (also over a defined period).
Both metrics measure customer loyalty and satisfaction and can be impacted by SEO. However, there's no clear or direct way to measure or quantify that effect to establish how much it impacts revenue.
Google Analytics and SEO ROI
Google Analytics is a free web analytics tool that can help you analyze numerous aspects of your website's performance, including SEO KPIs.
You can use Google Analytics to track and report on SEO metrics like organic traffic and conversions, making it much easier to determine the ROI of your SEO efforts in any desirable time scale.
7 steps to measure SEO ROI
Now that you know the SEO tools and metrics you can use, you can follow these seven steps to measure SEO ROI for your SEO campaigns:
Step #1: Define your time scale
The first step is to define the time scale that you want to use for your SEO ROI measurement. The time scale depends on the duration and frequency of your SEO campaigns, as well as the goals and objectives that you have set for them.
For example, if you run monthly SEO campaigns for your clients, you may want to measure SEO ROI monthly.
Step #2: Identify your campaign goals
The second step is to identify the goals you and your client have set for your SEO campaigns. These are the outcomes that you want to achieve from your SEO efforts, which define what "organic conversion" means for your campaign.
Step #3: Define the value of each lead conversion
The third step is to define the value of each goal or conversion your client expects from your SEO campaigns.
If your client is running a B2B e-commerce site, this is straightforward. You only have to assign the dollar value of each purchase to that particular conversion.
However, if your client is like 91% of B2B companies who rely on content marketing campaigns to generate leads or raise brand awareness, assigning value to conversions is a bit trickier.
Here's how you do it:
Track the average lead conversion rate
To define the value of all B2B lead generation conversions, you must establish the average lead conversion rate. The lead conversion rate is the percentage of leads that enter your sales funnel through a particular channel and become clients or paying customers over a given period.
It's important to distinguish lead conversion from organic conversion, as they are two different things. Remember that organic conversions are site visitors that perform a desired action, converting into leads. Lead conversion is when those leads convert into clients by making a purchase.
For example, if your campaign generates 500 leads in a month through an online form and 100 of those leads become customers or clients, your average lead conversion rate would be 20%.
You can calculate every desired outcome or conversion for your SEO campaign, or you can establish a single global lead conversion rate. That ultimately depends on your client's data and the conversion goals you set at the beginning of the campaign.
Establish the average customer lifetime value (CLTV)
In this context, the average customer lifetime value (CLTV) tells how much each client is worth to your customer's business (the one you're running a campaign for).
CLTV then represents the amount of money that a client is likely to spend with your customer's business over their entire relationship with it. It is calculated as follows:
CLTV = (Average order value) × (Average number of transactions) × (Average retention time)
For example, if your customer's clients spend $500 on average per order, make 10 orders on average every month, and stay with your customer's business for 12 months on average, their average CLTV would be:
CLTV = ($500/order) × (10 orders/mo) × (12 mo) = $60,000
A CLTV of $60,000 means that each paying customer your client acquires from the SEO campaign is worth $60,000 over their lifetime.
Calculate the monetary value of each organic conversion
With the CLTV and the lead conversion rate at hand, the final step is to multiply them to get the monetary value of each organic conversion.
For example, if your client's average lead conversion rate is 20% and their average CLTV is $60,000, the monetary value of each organic conversion would be:
Monetary value of each conversion = (Average lead conversion rate) × (Average CLTV)
Monetary value of each conversion = (0.20)×($60,000) = $12,000
In our example, since each customer is worth $60,000, and each organic conversion or lead has a 20% chance of converting into a customer, then each organic conversion has an average value of $12,000.
Step #4: Track your campaign's performance
The fourth step is to track your campaign's performance by measuring your SEO initiatives' key performance indicators over time.
In other words, you must track your campaign's organic traffic and organic conversions, which you can easily do with Google Analytics and other popular SEO tools like Semrush or Ahrefs.
Step #5: Calculate your SEO campaign's total organic revenue
With the organic conversion numbers and the monetary value assigned to each conversion, calculating your client's SEO revenue is as simple as multiplying these two numbers for each type of conversion and then adding the results.
For example, suppose you run a 1-month content campaign for a client that generated 500 form submissions worth $1,000 each and 100 brochure downloads worth $500 each, on average.
In this case, your client's total SEO revenue would be:
SEO revenue=Sum of (Number of organic conversions×Monetary value of each conversion)
SEO revenue = [(500) x ($1,000)] + [(100) x ($500)] = $550,000
Step #6: Calculate your client's SEO costs
Depending on whether you only provide content or offer a full-fledged SEO service, this step may vary.
In the first case, you must add the fees you charged for the content you created, plus all other SEO costs incurred by your client. Some of those costs may include the salaries or fees of an SEO specialist or team, SEO tools like Ahrefs or Semrush, and more.
If you run all of the SEO campaigns for your client, then the cost to the client is simply whatever they paid you for your service plus any other fee they may have had to cover for other related services.
Step #7: Calculate your SEO ROI
The final step is to calculate your search engine optimization return on investment by using the SEO ROI calculation formula we mentioned above. For example, if your client paid you $100,000 to run the full SEO campaign and it generated $550,000 in revenue, the SEO ROI would be:
SEO ROI= [(SEO revenue−SEO costs) / SEO costs] × 100%
SEO ROI= [($550,000−$100,000) / $100,000] × 100% = 450%
A 450% ROI means that for every dollar your client paid you to do SEO, they got $4.5 back in profit.
Forecasting SEO ROI for new or future campaigns
Measuring the ROI of SEO isn't just a digital marketing metric — it's a strategic necessity. Before starting an SEO campaign, savvy businesses recognize the importance of forecasting its ROI. As an initial step, this forecast serves as a compass, guiding businesses toward the right investment.
By estimating the potential returns, your clients gain a clearer perspective on how much to allocate to their SEO efforts and what kind of results to expect. Businesses often turn to competitor analysis tools to refine these forecasts.
Tools like these delve into the strategies of market leaders, providing valuable insights into keyword competitiveness, content gaps, and backlink opportunities.
Armed with a list of target keywords, with the competition's search engine rankings, and a clear understanding of organic search intent, businesses can make informed decisions regarding their content marketing budget and strategy.
Additionally, combined with their typical search engine rankings, average conversion rate, and CLTV, businesses can forecast and set realistic expectations for the return on their investment in SEO.
Content is king, but ROI is queen
SEO is a powerful and effective way to grow your business and achieve your goals. However, SEO isn't a one-time or a one-size-fits-all solution. It requires constant monitoring, measurement, and improvement to ensure that you get the best results from your efforts.
That's why SEO ROI is an essential metric that you must track and optimize for your content marketing agency. By measuring and forecasting SEO ROI, you can demonstrate the value of your services to your clients.
Plus, you open the door to optimize your strategies and tactics for your clients, improve resource management and budget, and set realistic expectations for your clients.
Content is king, but ROI is queen. And you need both to rule the SEO world.
FYI: StoryChief eliminates the need for various tools such as social media tools, automation tools, AI tools, SEO tools, and analytics tools. Create a free account and start publishing today. 🙌
