We have all been there. You know the situation where you are meticulously explaining to the client your well-crafted SEO plan on which you spent countless days, and you think they are in awe of your efforts. But when it’s their time to speak, they disappoint you a bit by asking: “That’s all good, but what about the ROI of SEO?” After all, SEO, like every other thing, is a transaction: you spend money, and you expect rewards.

Simplifying the ROI of SEO

SEO involves keyword search, link building, responsive website, EAT content, Latent Semantic Indexing, technical optimization, and so on. But that’s just the effort part of the plan. There is also another part which makes SEO a strategic investment.

You allocate resources – time, budget, personnel – to optimize your website and content for relevant search terms. This is all an investment to achieve a goal or a number of goals. They could be anything, like your website climbing search rankings or, getting more backlinks, or just cutting the load time, etc.

How to measure SEO ROI

If you’ve ever looked toward mathematics to calculate the cost and benefits analysis of your investment in SEO, then you might have seen this SEO ROI formula.

It simply calculates the returns by subtracting the cost from your earnings as a result of your SEO investment, then dividing it by the same and multiplying it by a hundred. What you get as a result is a percentage point answer, which tells you how much reward your investment has made. The range of this percentage point could be anywhere from the far end of a negative value to many hundred times.

But, in the real world, it is not as simple as subtracting two values, dividing them, and then multiplying by 100. Here’s why.

SEO ROI depends on several other factors: what industry you are in, what is the nature of the competition there, what type of website you are optimizing, and most importantly, what are your end goals. For example, the calculation of an enterprise’s SEO ROI will include a lot more metrics than a small business.

A website could be a simple blog post that wants to attract more traffic by acquiring more links on social media, or it could be an ecommerce website looking to rank higher on the SERP for a specific keyword to increase sales. For the e-commerce site, the competition will be more cutthroat, because of the market situation and the abundance of competitors.

So, let’s simplify the calculation with an example:

Take the example of a website that receives 10,000 visitors from organic searches per month before you implement your SEO plans. After optimization, the traffic increases to 15,000 visitors per month.

Now, let’s assume that 5% of all visitors take your desired action. This brings the website’s conversion rate to 5%. To calculate revenue from organic traffic, let’s assume an average order value is $50. With 15,000 visitors and a 5% conversion rate, the monthly revenue from organic traffic is:

Now, use the same equation to calculate revenue before SEO:

Congratulations, you have generated an additional organic revenue of $12,500.

The next step is to determine your SEO costs to see if your revenue is in the green or red.

SEO costs can be categorized into two groups:

Direct costs: These include expenses for SEO tools, subscriptions, and any external agencies hired for SEO services.

Indirect costs: These costs are salaries of in-house SEO staff, content creation costs if the content is specifically produced for SEO purposes and any freelancer fees associated with SEO tasks.

Let’s fix the SEO costs at $5,000. Now, subtract this amount from your additional revenue, and you get:

Now, using the SEO ROI formula, let’s calculate SEO ROI:

This brings your ROI on investment to 150%.

While from a mathematical perspective, this 150% ROI looks like a very shiny number, there are several other considerations that might need to be factored in from time to time to estimate a realistic ROI.

Long-term ROI

The SEO ROI formula provides a good starting point, but SEO is a marathon, not a sprint. Don’t get discouraged by short-term fluctuations. The plan should be to track organic traffic, conversions, and revenue over extended periods (e.g., quarters or years) to identify trends and assess the long-term effectiveness of your SEO strategy.

For example, seasonality is a factor that might impact organic traffic and conversions. An e-commerce store selling winter apparel might see a surge in organic traffic and conversions during the holiday season. Consider these seasonal variations when evaluating SEO performance over shorter periods.

Customer Lifetime Value (CLTV)

CLTV is a sum of revenue generated by a customer when they come in contact with your business. It goes beyond a single purchase and factors in returning customers and brand loyalty.

An effective SEO plan attracts high-quality visitors who are more likely to convert into loyal customers. These repeat customers contribute significantly to CLTV. While directly incorporating CLTV into the ROI formula can be tricky, understanding its impact helps paint a more holistic picture of SEO’s value. Consider customer acquisition costs as well. If SEO helps acquire customers at a lower cost compared to other channels, it indirectly contributes to a higher CLTV.

Beyond conversions

Some SEO metrics can be quantified, while others can’t be put into numbers that easily. For example, brand awareness. Your SEO efforts can significantly improve brand awareness, which is not easy to quantify directly, it’s a crucial factor for long-term success as strong brand awareness can translate into organic traffic growth over time and potentially higher conversions. Other factors might be improving user experience, more website authority, etc.

Maximizing ROI on SEO

Maximizing the return on investment (ROI) from SEO involves implementing strategies that increase organic traffic, improve conversion rates, and optimize costs. Here are some of the most effective ways to achieve this:

Optimizing content for maximum ROI

In any SEO effort, the content is a strategic asset. To maximize the ROI, you have to move beyond basic content creation and develop a content strategy that is in sync with your business objectives and targets your ideal customer persona.

This strategy prioritizes high-quality, informative content that addresses user search intent and establishes your website as a thought leader. This builds trust and engagement, ultimately leading to conversions and brand loyalty.

Your starting point lies with conducting in-depth keyword research using industry-specific tools. This will help you identify relevant keywords with significant search volume but lower competition. What this means is that now you can target searches with high commercial intent, attracting qualified traffic more likely to convert.

Don’t limit yourself to content creation. Actively promote your content across relevant social media channels and online communities to reach a wider audience and drive organic traffic back to your site.

Technical SEO: The foundation for success

Another way to maximize your SEO return is to ensure that your website is fast – as fast as the cars in the Fast and the Furious franchise. It has to load quickly on all devices, particularly mobile, its images should be optimized, codes streamlined, and a clear website structure with intuitive navigation.

This allows search engine crawlers to effectively crawl your web pages and users to navigate your website effortlessly. Utilize internal linking to connect relevant pages and establish a logical information hierarchy.

Building authority through strategic link acquisition

The gaining of high-quality backlinks from reputable websites within your industry serves as endorsements from other websites, signaling authority and relevance to search engines. This can significantly boost your ranking for targeted keywords. Again, this plan relies on creating valuable and insightful content that other websites naturally want to link to as a resource.

Data-driven approach for continuous improvement

You could be as meticulous as you can with your SEO plan, but boy, if progress isn’t shown in graphs that you present in client meetings, it all means nothing. To keep your SEO progress on track, you have to keep measuring Key Performance Indicators (KPIs) like organic traffic, conversion rates, bounce rates, and keyword rankings.

You can utilize analytics tools to glean valuable insights into user behavior and website performance. This will give you an insight into what’s working and what’s not. Another trick in your hat could be A/B Testing. This means you have to continuously refine your SEO strategy by testing different title tags, meta descriptions, and on-page elements to identify what resonates best with your target audience. This data-driven approach allows for ongoing optimization and improvement of your SEO efforts.

Finally, you have to stay in touch with current industry trends and search engine updates. The SEO landscape is constantly evolving, and you have to keep yourself informed about the latest algorithm updates and industry best practices. This ensures your SEO strategy remains effective and leverages the most up-to-date search engine optimization techniques.

Balancing clients’ expectations regarding ROI

The tension between the long-term nature of SEO and clients’ desire for immediate results is a constant battle in the SEO world. The long-term and step-by-step process of SEO, which is riddled with rises and falls, is always compared to the prompt and short-term benefits of paid marketing. Clients often come from a world of paid advertising, where results are immediate and directly measurable. They expect SEO to replicate that speed.

But in reality, SEO is a long term approach. It requires consistent effort to build website authority, create valuable content, and earn backlinks. So, what is it that you can do to dilute the client’s expectations and help them comprehend your long-term plan in a more rational way?

Setting realistic expectations

During onboarding, be upfront about timelines and break your entire plan into achievable milestones where you can measure the SEO return on investment. Brief your clients about the factors influencing SEO speed and showcase successes from similar clients by using case studies and historical data. Be transparent about the steps involved, potential challenges, and how progress will be measured. Regular reporting and updates can help manage expectations.

Focus on long-term gains

Another way to keep the client’s expectations realistic is to highlight the long-term benefits of SEO, such as sustainable organic traffic growth, brand awareness, and improved website health. This includes emphasis on the holistic benefits of SEO, including improved user experience, brand visibility, and long-term sustainability. You also have to clearly define specific performance metrics and KPIs that will be tracked and reported. All of this will help clients see tangible evidence of progress.

Track and report progress

We can all be a bit less apprehensive if we see our investment paying dividends, no matter how big or small. So, it is vital to provide the client with regular reports demonstrating progress on non-ranking metrics like website traffic growth, keyword rankings within reach, and backlinks acquired. This shows the foundation being built for future success. It is also important to maintain open communication. Explain algorithm updates and their impact and discuss any unexpected challenges.

Conclusion

Understanding and tracking these metrics and factors enables you to measure the effectiveness of your SEO strategy and optimize it for better performance and higher ROI. Each metric provides insights into different aspects of SEO performance, and together, they give a comprehensive view of your strategy’s impact.

It is also important to understand that the ROI of SEO is much more than what could be calculated from mathematical equations and what is displayed on dashboards of analytics tools. Any effort to improve a website ultimately benefits its users, which increases their satisfaction with the said business. This also builds brand awareness and trust, all of which can’t be quantified in numbers, formulas, and equations.