Today I’m going to show you exactly how to calculate SEO ROI.
In fact, this is the same calculation we use with our clients to ensure their SEO ROI is never less than 900%.
This is an easy-to-follow tutorial with screenshots and step-by-step instructions, so if you’re not super mathematical, you’ll love the simple steps in this guide.
Let’s dive right in.
Why Measure SEO Return on Investment?
Are you considering hiring an SEO agency or investing heavily in SEO?
Do you want to know that the revenue from your SEO efforts will exceed the expenses?
I’m assuming you answered yes to both of those questions.
SEO is no different from any other kind of marketing. The amount you spend on it should be less than the amount you get out of it.
In other words, you want – no, you need – a positive return on your investment.
That’s not too much to ask, is it?
While this calculation is relatively simple for other kinds of marketing (paid ads, for example), it gets a tad more complicated when talking about SEO.
One (false) assumption is that organic traffic is “free”, so it’s impossible to calculate the SEO return on investment.
Another complication is assisted conversions. How do you attribute a sale to someone who’s landed on your page using one search term, but later visited your brick and mortar store to make a purchase?
Fortunately, there are a couple of calculations to help you determine whether or not your SEO efforts are a worthwhile investment.
SEO as a Long-Term Investment
Before we dive into proving the value of your organic marketing, I’m going to share a little home truth.
Like the stock market, you need to be prepared to stick to your SEO strategy – through the ups and the downs, the good times and the bad.
Clearly, this is an uncomfortable proposition for most CEOs, managers, CFOs or other business stakeholders, who are used to instantaneous gratification from paid ads or influencers.
But the benefit of a well-thought-out SEO strategy is that you can get an exceptional SEO return on investment if you’re prepared to play the long game.
(You can get started with a Free SEO Proposal from Bubblegum Search )
As a long-term commitment, without knowing the projected ROI on your SEO efforts, how can you decide whether to bother at all?
Read on to find out how.
How to Calculate the Value of Organic Traffic
To figure out the ROI on SEO, you need to know two basic metrics:
- How much you’ve spent on SEO (investment)
- How much you’ve generated from it (return)
Your investment is the sum of all the money you’ve spent on SEO. That could be link building, content creation or on-page optimisation, or if you’ve hired an agency, that would be the fee involved.
That’s the easy part done.
How on earth do you work out the return?
At Bubblegum Search, we work it out with this formula:
(Monthly Keyword Search Volume x Click-Through Rate) x (Average Conversion Rate x Average Goal/Order Value)
= Estimated Monthly Revenue
Bear with me, we’re going to break this down.
Let’s consider how it works with our imaginary client: a luxury bedding eCommerce store.
- The total monthly search volume for our example keyword “Bed Sheets” is 9200
- The expected click-through rate is 10% (for the number three spot)
- The average conversion rate is 3%
- The average order value is £300
(9200 x 10%) x (3% x £300) = Estimated Monthly Revenue
In this example, the estimated revenue is £8,280 per month, for every month the company ranks number three for the search term ‘Bed Sheets’.
Imagine if you had that kind of figure for your SEO efforts. Wouldn’t buy-in from management or investors be much easier?
How does this work in practice?
Keep reading for the exact steps on how to calculate SEO ROI for your business.
Organic Search Volume
There are tons of tools available online to estimate the search volume for a keyword. Free tools include Google AdWords, KeywordTool.io and UberSuggest, while paid options include Ahrefs and Moz.
Each tool has its pros and cons, as well as loyal supporters. Here at Bubblegum, we like to use a combination of Google AdWords and Ahrefs.
Let’s start with Google AdWords Keyword Planner.
Log in to your Google AdWords account (or set one up if you don’t already have one) and navigate to the Keyword Planner tool. On the next page, select ‘Discover New Keywords’.
Then you can enter all of the keywords you’d like to find the search volume for. In this example, I entered “Bed Sheets” and then hit ‘Get Started’.
Here’s what my results look like:
The useful information here is the ‘Top of page bid’, low and high range. These figures tell you the range of what advertisers have historically paid for a keyword’s top of page bid, based on your location and Search Network settings.
What you’ll also notice is the average monthly search ranges from 1000-10,000. Unless you’re a paying customer of AdWords, you won’t get an exact figure, which is a major downside with Google Keyword Planner.
If (like us), you’d prefer more specific data, you’ll need to head over to Ahrefs to get a detailed estimate.
You’ll need a paid Ahrefs account (or you can try it free for seven days if you’re on a budget). Inside Ahrefs, head over to Keywords Explorer and enter your search term.
The screenshot below includes a wealth of juicy information, including the keyword difficulty, how many backlinks you need to rank in the top 10 and, of course, the estimated search volume for the United Kingdom, as well as a global estimate.
For the UK alone, the figure is 9200 for ‘Bed Sheets’.
Okay, now we’ve got the first figure in our SEO ROI calculation formula: the average monthly search volume.
It would be lovely if everyone who searched ‘Bed Sheets’ clicked into your website.
But unfortunately, we know that even the websites ranked in the top three positions in the SERPs won’t have a 100% click-through rate.
There are a few reasons for this.
Paid ads often take up the top spots and Google now tries to answer a searcher’s query without them having to click into a website. You’ve likely noticed FAQs taking up prime real estate on Google.
So, the monthly search volume is just one piece of the puzzle.
In order to fully understand the value of ranking in the top three or top ten, you need to have a decent estimate of how many searchers will click through when you’re number one, two or three in Google.
You can use ‘Advanced Web Ranking’ to find the historical click-through rate for your search term in relation to the rank in the search engine.
Look at the graph below. Position one gets between 28% and 34% of the clicks if you’re in position one, while position 10 is hovering around a 1% click-through rate.
If the total monthly search volume for ‘Bed Sheets’ is 9200, then in position one, based on a 34% click-through rate, you’re likely to get 3094 website visitors per month. Position two, with a 16% click-through rate, gets 1456 visitors, and so on.
For this calculation, we’re going to assume the fictitious website ranks number three, with an estimated click-through rate of 10%.
Conversion Rate and Order Value
Next, use Google Analytics to find out the conversion rate and the average order value of a customer.
First, you need to know which landing page your keyword sends traffic to. For instance, if you’ve built a new website and are targeting ‘Bed Sheets’, you should have a landing page designed specifically for that search term.
Existing websites should be able to use their analytics software to figure out which landing page is ranking highest for the search term. If you use Ahrefs, it’s simple to find which landing page ranks highest for your target keywords.
Second, you need to use your (hopefully already set up) Google Analytics account to find the conversion rate for that page. If you’ve set up conversion goals, you should be able to visit:
> Behaviour > Landing Page > Conversion Rate
This should give you the exact percentage of conversions from that landing page.
Now, use the average order amount and the conversion rate from the landing page for the last part of the formula.
Calculate Estimated Revenue
You’ll be pleased to know that the majority of the legwork is done and now we just need to throw the figures together to work out the estimated monthly revenue.
Let’s revisit the original formula:
(Monthly Keyword Search Volume x Click-Through Rate) x (Average Conversion Rate X Average Goal/Order Value)
= Estimated Monthly Revenue
- The total monthly keyword volume: 9200
- Click-through rate for position three: 10%
- Average conversion rate: 3%
- Average order value: £300
(9200 x 10%) x (3% x £300) = £8280
Your estimated monthly revenue for position three is £8280.
Calculate SEO ROI
Phew. Give yourself a pat on the back for sticking the course. One final push and we’re done.
Step #4 determined the return from nabbing the holy grail of position one, but we still haven’t figured out the return on investment.
To calculate the ROI on SEO, you need to use the following sum:
Return on Investment = [(Return – Investment) / Investment] * 100
Let’s run with the assumption that our fictitious bedding company was not getting any organic traffic for the keyword ‘Bed Sheets’.
But thanks to a monthly investment of £2000 in SEO (and about 12 months of time; remember, SEO is a long-term investment), it’s now ranking number three.
Return on Investment = [(£8280 – £2000) / £2000] * 100
The ROI in month one is 314%.
Okay, that’s good, but it’s only part of the picture. That’s a massive 314% ROI on a single keyword, in position three, with a medium search volume.
Imagine multiplying that by tens or hundreds of keywords. Increasing the monthly search volume by 2x, 10x or 20x.
And, that’s not to mention assisted conversions or the organic assisted conversion data you can get from Google Analytics. As an example, what about that pesky customer who landed on your page for one term, bounced, but later went to your shop and spent £500 on sheets?
Or what about the conversions from remarketing? A clever retargeting campaign could easily mean an originally organic visitor returns to your site and converts at a later date. In this example, the conversion would be wrongly attributed to paid.
Another customer may have found you in the SERPs and revisited your website via social media. These conversions aren’t included in the calculation because, frankly, these conversions are very tricky to track accurately, or in some cases impossible.
What you can safely assume is the conversions you generate directly are just one piece of the puzzle. There are many more benefits (e.g. brand authenticity, brand awareness, off-site conversions) for your business from ranking in the top positions.
Over to You
I hope this guide showed you how to measure SEO ROI.
Now I’d like to hear your thoughts.
Did you learn something new from this guide?
Or maybe you have a question.
Either way, do drop a comment below.